EU must mobilise SMEs in island regions – Alfred Sant

The European Commission should give special attention and promote the financial mobilisation of equities to fund non-speculative investment by services in small and medium enterprises in the peripheral, isolated and island regions of the European Union, Sant said.

Speaking at the European Parliament in Strasbourg, Sant said that many small and medium companies in the EU and many start-ups prefer to experiment and innovate with investment and expansion at home before they step outside their border.

“If they are successful there, moves towards other European markets will be seen as achievable and attainable.”

He added that the cultural factors that define entrepreneurship couldn’t be ignored.

The parliament was discussing the ‘Capital Markets Union’ (CMU) launched by the European Commission to help build a true single market for capital across the 28 EU member states.

“The Capital Markets Union (CMU), is a key pillar of the Investment Plan aimed to tackle investment shortages head-on by increasing and diversifying the funding sources for Europe’s businesses and long-term projects.”

Sant said that Europe needs to develop a better way of mobilizing cash for investment on a national and European basis.

“The US does this much better than Europe. The idea is that by opening up new ways of mobilizing capital on a European scale, we shall be coming closer to American levels of getting cash to enterprises,” he said, adding however that capital markets need to be promoted on a national basis at the same time.

“Regulatory and cultural barriers need to be removed,” he said.

He added that it is necessary to define exactly what makes capital markets in the US so much more dynamic, but that it would be unwise to implement a CMU  simply by transposing the US model to Europe. 

“The proposals being made by the Commission do not go in this direction,” he said. “The Commission is doing the right thing by emphasizing the digital sector, as a new generation of European innovators and entrepreneurs is emerging in it.”

He added that this generation may be characterized by people who are more willing to attempt new ways of meeting financial risks and challenges than their predecessors.

“In all this, the step by step approach that is being proposed is praiseworthy. Too many new procedures and regulations to follow would in the end only increase barriers to entry and costs.”

He encouraged the EU to create and promote the CMU by using a light touch, one that makes the proper distinction between the need for regulation and over-regulation.