Economy Minister 'ties political career' with White Rocks project

People give their views on the state of Malta's economy. Video: Ray Attard

Economy Minister Chris Cardona said that he has tied his political career with whether the development of the former White Rocks complex in Pembroke proves to be a success or not. 

“Development projects such as White Rocks had been shelved under previous Nationalist administrations, but some really strong investors have now shown interest in investing in it and I am tying my political career with the success of its investment,” Cardona said on Monday night’s edition of Reporter that discussed Malta’s economy.

Eleven investors have submitted their proposals for the development of White Rocks and a committee is expected to present the government with a list of recommendations on how to best utilise the 45 hectares of land. The government is targeting a “village of luxury units” including five-star hotels and a “high-quality lifestyle community” village that will be fully funded by private investors. Cardona said that the development project will take the surrounding environment into account.

The White Rocks project had fallen through under the previous nationalist government and Shadow Finance Minister Tonio Fenech cast doubt over the current government’s ability to successfully oversee its completion.

“We hear a lot of talk from the government about large-scale projects, but the gas power station and the Gozo casino projects have been delayed, and there’s a lot of dispute going on over the granting of casino licenses in Malta,” Fenech said on Reporter. “I will talk about this [White Rocks] project when it happens.”    

Fenech also said that the 25% reduction of water and electricity bills for families has come at a cost.

“Enemalta’s debt has increased by €150 million,” Fenech said, presumably referring to Finance Minister Edward Scicluna’s recent statement on the Times of Malta that Enemalta pays the government €150 million in excise duty. “Vehicle licenses and personal licenses have gone up, gas and fuel prices have increased, and MATSEC exam fees have increased. Meanwhile, people will only get a 58c COLA increase.”   

Cardona denied that the government is relying on the sale of Maltese citizenship though the Individual Investor Programme and on Shanghai Electric Company’s acquisition of a 33% of Enemalta to fund the reduction in utility bills.

“Selling shares in Enemata to Shanghai Electric Company will help Enemalta get back on its feet, but that’s not why we reduced utility bills,” Cardona said. “The funding [for the reduction of utility bills] can’t be explained through just one factor. However, the current government had found Enemalta deep in debt and in risk of liquidation. The fact that it has been saved and that it can start selling electricity even to foreign countries is an explanation in itself.”

Cardona reiterated the government’s pledge to reduce utility tariffs for businesses in March 2015 and Paul Abela, President of the General Retailers and Traders’ Union (GRTU) insisted that such a reduction was crucial for Maltese businesses to remain competitive.

“For some companies, electricity bills make up 90% of their total business costs,” Abela said, while also calling for the abolishment of eco-contribution tax.

“People who import goods to Malta from Sicily via the catamaran link don’t pay eco-tax for those items, and this is harming local businesses,” Abela said.

‘Bureaucracy one of Malta’s largest problems’

Meanwhile, Chamber of Commerce President David Curmi warned that Malta must reduce bureaucracy within the government it wants to attract more foreign investments.

“Malta recently ranked last out of all the 28 EU countries and 93rd globally with regards to how easy it is to set up businesses,” Curmi said. “While some government agencies have become more simplified, there are still some departments that make potentially investors lose heart. We need to start addressing these inefficiencies.

“Bureaucratic bottlenecks are Malta’s greatest problems.”

Chris Cardona said that the government has already managed to reduce bureaucracy. “There was a mentality under the previous government that it was hard to reduce bureaucracy,” Cardona said. “However, this government has already simplified the public procurement process and the foreign investment process through Malta Enterprise.” He cited last month’s IBM Global Location Trends Report that ranked Malta second worldwide in the quality of foreign direct investment (FDI) that it attracts.

“In the final three years of the previous Nationalist government, Malta Enterprise only managed to attract 13 new FDI projects, but it managed to attract 36 new FDI projects in 2013 alone,” Cardona said. He cited recent reports from the European Commission, the Eurobarometer, and credit-rating agencies Moody’s and Fitch that remarked positively on Malta’s economic growth.

“The government’s role in this economic success is that we’re creating an economic climate in line with what businesses are advising us,” Cardona said.  

However, Tonio Fenech criticized the government for not having a long-term economic plan.

“Recent positive reports such as of Moody’s are clear statements that Malta is where it is because of how it emerged from the recent financial crisis, a testament to the previous Nationalist government’s economic policies during that period,” Fenech said. “The current problem is that the government isn’t looking into the future and that it hasnt’ identified new economic niches to expand into.”

He said that while the tourism, financial, and remote gaming sectors are performing well, manufacturing productivity has decreased. He also said that Malta’s recent economic growth is largely due to high government expenditure.

“The public sector increased by 2,100 employees this year,” Fenech said. “The economy shouldn’t be dependent on government expenditure.”  

Economist Gordon Cordina, appearing as a guest opinionist on Monday night’s programme, said that that a large public sector can only be considered worrying if it’s wasting resources and if the economic growth is low. He also advised caution on David Curmi’s earlier plea to revise the COLA mechanism.

“COLA should remain there for the most vulnerable people who don’t have a trade union that properly represents their interests, and for pensioners on social benefits that don’t increase automatically,” Cordina said.

Live current affairs programme Reporter is presented by Saviour Balzan and produced by MediaToday. The programme’s new format includes lawyer Ramona Frendo as a resident opinionist.

Reporter is aired live every Monday at 9.45pm on TVM 1