30 November - 6 December 2000

SMEs could benefit from a ‘learning network’

by David Kelleher

As a member of the European Union, Malta could benefit from strategic investment advantages due to its position. Staying out of the EU, on the other hand, would make it extremely difficult for the island, according to John Dunne, CEO of the South Dublin Chamber of Commerce.
“As a hub, Malta is in the perfect position – at the centre between Europe, Middle East and North Africa. The island has a skilled workforce and the language skills. These assets coupled with a sound telecommunications infrastructure, broadband technology and energy requirements, could make the island extremely attractive to foreign direct investment, especially in the areas of research development and marketing,” Mr Dunne told The Malta Business Weekly.
Drawing parallels between the two countries, he said both Malta and Ireland were at the periphery of Europe and both were looked at as a gateway to other countries.
“Contrary to what critics say that Ireland is doing so well because of American investment, there is no set of circumstances that brought prosperity to Ireland. We were successful in attracting FDI simply because we have the language, we are EU members and are also members of the euro. Without these factors, there is little doubt that Ireland would not be the same today,” Mr Dunne said.
Stressing on the importance of broadband technology and energy, which are essential to attracting investment, Mr Dunne said that Microsoft sees Ireland as a hub because it fulfils these requirements.
“If Microsoft were in Malta – and you were EU members – they would have access to language skills and strategic advantages over others outside the region. However, such chances would not exist if Malta was not a member. It is also naive to say that the EU is irrelevant,” he said.
Mr Dunne added that there are parallels between Ireland and Malta also with regards to immigration. “The government should tap those Maltese who have the power and clout who live abroad, especially in the US and Australia. This worked extremely well for the Irish,” he said.
One of the fears some Maltese have is that the country will be swamped by foreigners. “I don’t believe this will be the case. Taking Ireland as an example, this did not occur. The country did, however, experience a strategic population growth,” Mr Dunne said.
Another problem is the competition that small and medium enterprises will face upon membership.
“Every company should be worried about its future – big or small. SMEs have fewer resources to meet the shock of membership and to gauge trends on a large scale,” Mr Dunne said.
“However,” he added, “we found a solution that has enabled SMEs to remain competitive and do well. It is what we call a learning network. Rather than providing them with financial aid, they are encouraged to get together and share experiences. Each SME helps another to overcome a problem and that has proved to be extremely effective. In fact, of the 100 companies in one area that network, they had registered an 18 per cent increase in employment and 20 per cent increase in turnover.”
With regards to government aid, Mr Dunne said that the Irish tradition was to protect jobs and
business wherever possible.
“Government should assist companies whenever possible. It is its legitimate right to do so and depends on the economic situation in the country. Under EU laws, governments can provide aid to micro-enterprises,” he said.
Turning to the impact membership of the euro had on Ireland, Mr Dunne said that on the whole, membership had a positive effect on the economy. “Joining the euro has shown our commitment to the future of Europe. When we joined we expected the sterling to fall but it did not. The main advantage from the euro was that it allowed us to retain our currency. Another benefit is that interest rates are relatively low and in line with inflationary rates,” he said.
Asked which areas he believed Malta should concentrate on, Mr Dunne said there were four or five international economic drivers.
“There is scope for Malta to become a global regional centre for shipping. The drydocks is a small part of the economic chain. You have to look at related activities that should be developed ‘into’ the Drydocks, such as arbitration.
“Information Communications Technology is another very important area. At present ST is a major contributor to the economy. The island must diversify and follow new trends. Malta must also ask itself ‘can we offer something better than Sicily?’,” Mr Dunne said.
Will membership affect Malta’s neutrality?
“Ireland has never come under any pressure from the European Union on neutrality. Given the Irish experience, neutrality is not an issue. Neither has Rapid Reaction Force become an issue,” he said.