4 - 10 October 2001

Competitiveness – targeting new markets

The conference being organised by the Malta Chamber of Commerce tomorrow on competitiveness comes at an opportune time for the country. The tragic events in the US on 11 September have sent markets reeling and forced many economies into a recession. Companies are either shedding staff or folding up. Only those that can remain competitive and develop new business when the country is in a recession will succeed.
GDP growth figures for Malta for the first two quarters of this year are not available, however there is no doubt that growth has decreased over the past nine months. The Maltese economy is still growing but there is a good chance that the country could be, at least theoretically, on the verge of a recession.
The theme of tomorrow’s conference, “Competitiveness – the way to prosperity” becomes more relevant now in the light of what is happening on the global stage. Companies can only remain competitive if they are willing to accept change and invest even during difficult times. Maltese companies must stop looking inwards but focus on doing business on a wider scale. They must look for new ventures, new markets. To remain competitive, some will have to start afresh. Local companies are now faced with a choice: they must change their way of thinking business or else give in to competition. There are no alternatives.
The past few months have been very hard for Maltese businesses. Companies suffered severe cash flows, supermarkets have gone into liquidation or were forced to find alternative investors. Creditors risked losing millions of liri because companies failed to pay up in time. Banks tightened up lending procedures and increased provisions for bad debts. What happened on 11 September in the US has only served to add more pressure on flailing economies.
To a certain extent Malta has been sheltered from the serious effects of the terrorist attacks, but we have not escaped unscathed. Finance minister John Dalli told The Malta Business Weekly last week that he did not
envisage long-term effects on Malta’s economy. This may be the case, but we must not start believing that all is well simply because the government does not have to give out millions in subsidies to save the national airline.
On the other hand, and rightly so, Malta could stand to benefit from a major slowdown in the world economy but only if the private sector, with government help, can target areas of interest to them. The government’s initiative to bring together top entrepreneurs and businessmen with Maltese links to form part of the Malta Enterprise Council was an excellent move. Their input, especially now, will prove invaluable to the government and Maltese business. The government must also promote further the Business Promotion Act, an excellent tool to attract foreign direct investment and encourage the private sector to invest and expand operations.
Competitiveness will only come about if companies carefully plan every move they make. It does not necessarily mean going to a bank to take out another loan or overdraft facility. A business can become competitive if it manages to cut down on expenses, it manages to streamline its operations and attract new business.
In today’s doom and gloom scenario, Maltese companies must now focus on improving their operations through restructuring. Restructuring and looking at new markets.
Malta can only enhance its competitiveness through the competitiveness of its businesses, and through the encouragement of individuals and local businesses. In an interview with The Malta Business Weekly, Melfort Campbell, a well-known Scottish entrepreneur and one of the speakers at tomorrow’s conference, said a country needs a commercial base that is in the forefront of investing in the development of new products and services that meet new and emerging needs.
“To achieve this you have to accept that government can do very little directly, and has to do what I call ‘three deep thinking’. That is indirect actions and creation of an environment that is encouraging for this entrepreneurial activity. Thus not handing out grants and other direct actions, but looking at how the tax system encourages individuals, who are attuned to evolving market needs. Encourage them to rest in, and invest from, a stable rewarding base.” The government, to a certain extent, has succeeded through the Business Promotion Act, but more has to be done to stimulate the economy. The Malta Business Weekly has stressed time and again that government’s main focus should be cutting down on public expenditure.
“Don’t play at the edges; create an environment where entrepreneurial behaviour and investment is inherent and rewarded,” Mr Campbell said. This is the basis for a company to become competitive. This is also advice that the government should heed.