Now part of the EU, Malta is using its affiliation to further reform processes, develop a dynamic economy and improve the standard of living
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halta
was one of the 10 nations that acceded to the European Union (EU) on
May 1, 2004. Almost two years on, the country is by no means slow in
acknowledging the benefits of this move, particularly the more obvious
ones such as the allocation of one of the highest amounts per capita
from the EU Structural and Cohesion Funds for the first three years
of membership – more than 380 million euros – and another
substantial portion for the next financial perspective up to 2013.
However, it has also become very clear that Malta sees EU membership not as an end in itself, but as a valuable contribution to the country’s own economic reform process, and as a tool that helps support future progress and speeds up the attainment of the government’s objectives. These are primarily the creation and development of a dynamic economy based on high value-added industry and high-quality skills, capable of providing a high standard of living for its people.
Despite being the Union’s smallest member, Malta is confident in its own right. “Within the EU, it’s not a matter of size, but of levels, ideas, positions, opinions and other such factors. We are an integral part of the decision-making process and that is extremely valuable for us,” says Dr. Lawrence Gonzi, Malta’s Prime Minister.
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The country’s reform process, which affects areas ranging from pensions to state-owned companies, would be under way with or without the EU, stresses Dr Gonzi. With this level of commitment across the board, the economic impact is beginning to show. National economic growth, while not yet up to optimum levels, is moving in the right direction. Fiscal consolidation is progressing according to plan, the public sector is becoming more efficient, privatization is under way and the deficit is firmly under control. With the additional help of EU funding, the government continues to invest in the environment, health, education, social services and infrastructure. “We have managed to implement projects that tackle very important areas such as waste management, clean seas, clean air and clean water, which required major structural funds to proceed. These are now available thanks to membership,” he explains.
Foreign direct investment in Malta is also increasing, particularly in the pharmaceutical and ICT sectors, where it is expected to generate hundreds of new jobs. Meanwhile, the growing financial sector is absorbing graduates in this field as quickly as they qualify. With the focus on value-added services becoming the mainstay of the economy, human resources continue to be the nation’s most valuable asset. Positive steps in this direction include doubling the size of university intake and extending the range of the country’s educational services.
Malta is strategically placed at the southernmost tip of Europe, providing a practical and efficient base from which European and American businesses can access North African markets. “Being situated so close to the African continent proves to be a very effective proposition for businesses to come to Malta in a number of sectors,” adds the Prime Minister.
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Being an island presents no real inconvenience for business. The Maltese digital communications network is one of the most modern in the world. In terms of physical connectivity, the national airline, Air Malta, welcomes the new open skies available through EU membership, and aims to increase connections throughout Europe. Company chairman Lawrence Zammit believes that Air Malta has a critical role to play in the country’s development. “We are not just the prime movers of tourists, we also support the manufacturing sector,” he says. Air Malta is important in this regard especially in light of the fact that 90-95 per cent of all products manufactured in Malta are for exportation.
Although EU membership will increase competition for the airline nationally, it will also give Air Malta the opportunity to take advantage of external markets, explains Mr Zammit. “We believe that the EU’s current transport sector policy is suitable for Malta. Today, Air Malta is seeking to exploit niche opportunities within the EU in operating intra-European flights, which do not actually touch Maltese shores,” he states. The firm is already operating flights between Catania and London, as well as flying out of the UK from Bradford and Bristol.
Almost two years on, it would seem that the decision to join the EU has been a good one. “EU membership has been an extremely positive experience so far, even though we are still at the very beginning of the journey,” says Dr Gonzi.
Reforms: ‘a common sense recipe for jobs and growth’
The Lisbon Agenda was launched in March 2000 with the aim of creating a unified, knowledge-based economy in Europe that is both competitive and capable of sustainable growth, and which leads to an increase in quantity and quality of employment over the next ten years.
Prime Minister Dr. Lawrence Gonzi has referred to it as “a common-sense recipe for jobs and growth”, emphasising that Malta’s own national priorities fall in line with this policy. Accordingly, Malta has set up a National Reform Programme (NRP) to monitor the implementation of the Lisbon Agenda. The NRP covers five strategic themes: sustainability of public finances, competitiveness, employment, education and training, and the environment.
There are a number of challenges that are particular to Malta, such as that of the very low female participation rate. Specific initiatives have been created which focus on increasing this rate, but currently the main priority is to train the national workforce.
“Investing in a knowledge-based society will create an enormous demand for a work force that is highly ICT-knowledgeable. We already have a proportion of experienced and informed professionals within this sector, but the demand for such people will continue to increase. In order to satisfy this request, investment has to be made within this sector,” says the Prime Minister.
Consistent investment in human resources is one of the reasons for the high standard of living in Malta, but more needs to be done. “We know where we want to be going in ten years time,” says Dr Gonzi.
Tel: +44 20 76296213, Fax: +44 20 74953707 - [email protected]