5 - 11 October 2000

Malta must aggressively penetrate foreign markets

by a staff reporter

The local community must adopt an outward looking approach and aggressively seek to penetrate international markets, the editorial in the September issue of the Commercial Courier, published by the Chamber of Commerce, says.
The editorial, says however, “it is rather unfortunate that Malta’s protectionist trade policy adopted in the past decades has somewhat undermined export orientation because a section of local industry was shaped into inward-looking concerns producing for the domestic market under protection from import competing goods”.
Nevertheless, the country, it adds, must now look forward and focus on promotional and productive measures. “The promotion and establishment of export consortia for instance, should be further encouraged. This would enable small firms that cannot afford an in-house export department and are therefore unable to tackle the export market on their own, to pool in resources and carry out a collective research and marketing effort.”
The editorial examines the various activities and facilities available to businessmen to help them in export oriented activities. These include the Malta External Trade Corporation Ltd (Metco) through its trade missions to target markets, participation in international trade fairs, market research services, and training for export.
“Another related facility is made available to the prospective exporter by Malta Export Credit Insurance (MECI) which offers protection against the risk of non-payment by foreign clients. The business community can also avail itself from the three different assistance programmes offered by IPSE. These incentives include subsidies on the preparation of strategic business plans, product development, improvements in manufacturing technologies, management consultancy and export marketing plans, among others.
The editorial stresses that the attraction of more Foreign Direct Investment (FDI) is vital to the future prosperity of our economy. In this regard, the publication of the updated Industrial Development Act (IDA), outlining the package of investment incentives aimed at both the manufacturing and services industries, is long overdue.
“The attraction of FDI is important to the country because foreign owned companies not only promise a transfer of technology but are also generally export orientated. This is most beneficial because it may be conducive to the expansion of aggregate demand in the local economy particularly if they are able to foster vertical links with local suppliers of raw materials, components and services.”
The stimulation of aggregate demand through any cash injections from the public sector to ameliorate the current situation cannot be relied upon given the financial dire straits within which the local public sector is operating, the editorial says. “But the budget deficit and national debt problems are also adversely affecting the situation further. While government is currently seeking to maximise efficiency in collecting direct and indirect tax revenues both from private economic operators as well as from the public at large it should meanwhile ensure that refunds of tax, where due, should be efficiently handled and that monies owed to businessmen by way of contracts should no longer be delayed,” it adds.