Industrialist Helga Ellul, who two months ago was appointed as the first President of the merged Malta Chamber of Commerce, Enterprise and Industry, spoke to Charlot Zahra about the challenges facing local business at a time when the euro area faces a recession
What are your first impressions on your new post as President of the Malta Chamber of Commerce, Enterprise and Industry (MCCEI)?
The MCCEI is still structured on a temporary board of Management and a temporary Council, until we hold the Annual General Meeting in March. Then a proper Council will be established.
Obviously this gives me time to have a look internally to see what needs to be done to make sure now that the two cultures of the merged organisations are aligned.
As we have already said, we will put our resources to the best possible use in order to give our members more value-added and a much better service.
In your view, what are the main challenges currently facing Maltese enterprise?
Obviously we all know what the challenges are at the moment. They are so big that we do not even know what is coming on daily basis, so it is very difficult to look ahead to try and outline what is coming.
What one has to be doing, and what is being done at the moment by all stakeholders in the economy, is to be very pro-active, foresee the next steps in order for Malta to weather the storm as fast as possible.
I would say the major effects that we are already feeling are obviously in manufacturing, but they will spiral. If we feel the effect in manufacturing, it will be either through short working weeks or redundancies that will have an input on purchasing power and the whole confidence of the consumer. If we feel it in retail, we will feel it everywhere.
The second sector of the Maltese economy that is feeling the nudge is currently tourism. We are already seeing that hotels and other organisations will be impacted, mainly from our major market, the UK.
In an interview with Business today last week Finance Minister Tonio Fenech said that although he might consider taking up some of the suggestions MCCEI put forward to him in a proposal to ease up the stress brought about by the economic downturn, he said he will not introduce any blanket measures. Do you agree?
As we have already said in the media, we have made our proposals at a special MCESD meeting with the Prime Minister. In the meantime, we had intensive meetings, first with the Chairman of the MCESD, with the Governor of the Central Bank and then with Minister Fenech.
We have been informed of how a specially set up task force will tackle the issues we are facing. We are very much in favour of this move; we think it is the right setup since the Chairman of Malta Enterprise is involved, along with board members of the MCCEI.
I think what the Government is trying to do at this moment is to see the areas and trying to gauge the issues and the problems so as not to let them escalate, rather than adopting a blanket approach.
That’s what we were told. We’re working very close with them. We have also been asked to keep our ears on the ground with our members to bring forward our issues right away.
We have established a very close working relationship with government since this meeting. Government is trying to be, like we suggested: focused and implementing targeted measures – to see exactly where issues are. We asked government not to wait until the issues get too big. I think that is exactly what it is doing.
For instance, there will be a support scheme from ETC for re-training, which is something we have pushed for since it helps allaying fears at employee level.
There is enough growth in different areas, so it is a matter of re-balancing the economy by providing the right incentives. I think this can be done.
In the same interview, he also said “If truth be told – there is no crisis in employment – we are floating in the same figures. There is no doom and gloom – just a little bit of pressure. There is no crisis – but a challenge in manufacturing and tourism.” What are your reactions to this?
When at the beginning I came out very strongly in favour of a stimulus package it really sounded like a crisis, because that is the language being used globally. I still believe that we do not have a crisis in Malta. We are indeed feeling effects, but thanks to our financial institutions, our problems are not of the same magnitude as what they are facing abroad. What we at the Chamber actually said, to use the right words, is that we need more support schemes in areas like manufacturing, automobile and textiles. We said we need to see more what these companies need, what their future plans are, what their investment programmes are, and if something can something be done, they should be given the right support to overcome the situation.
When do you think the international recession will recede?
I wish I knew. I would have to consult my guru on this. I think there will be countries that will come out faster, depending on the mix of the economy. There is a slight indication that the German economy is improving slightly, but you know how it is these days - it looks positive on one day and negative the next day. At the moment there is so much uncertainty. We have to see how the US will be tweaking its schemes, and that is when we will know whether they are really effective.
The same can be said for the UK. I think everybody is getting on board in trying to get the economy back on its feet, but we do not yet know how effective all actions will turn out being.
I don’t see the international recession receding before the end of 2009.
The largest Bank in Malta, HSBC has published its results. The Bank did register a high profit but less than the previous year. Will these results reflect in any way on your members’ performance this year?
I think that like every enterprise, HSBC will do its homework to see how they can maximise their profits in the future. But under the present circumstances, I think it’s good news to be honest.
The results that came out are for 2008, so these do not reflect what is happening now. I don’t think that with a bank like HSBC, because of such results, there could be an impact on the local market.
You are now an organisation representing both importers and manufacturers. Are there more synergies or opposing stances between the two?
We know that over the past years, the traditional line between importation and manufacturing has gone. Today, a lot of our manufacturers actually import too, and vice-versa.
For instance, the furniture sector is still manufacturing while it is also importing. This, I think, would be a synergy, because in one way we want to see how manufacturing can be sustained but also how it can grow.
Instead of being in a constrained area and inward-looking, in Malta we need to be forward-looking.
In May, Malta will celebrate five years since it joined the EU. Are we really taking up all the opportunities of a single market?
Malta is still a young member. Five years in such a big institution is not a long time, but according to what is reported in the media, Malta is one of the countries that has used EU funds most effectively and has obtained a lot of funding.
I think in such a short time, Malta has done remarkably well within the EU. Coming from an entry where we still had to build up our capacities with very limited resources, I think that we have done extremely well at all levels and participated to the extent that we can. I think that Malta’s accession to the EU has been a tremendous success.
Which are those areas where we can capitalise better?
There are always areas where you can capitalise better. I think even now, the European Parliament is the place where we can voice our own issues to the central government, especially with regard to illegal immigration, where we have been on the front line.
Where we need to help out is in getting our business people together to form consortia or merge in order to tender at European level and better penetrate the European market.
When in Malta we say that we have small and medium enterprises, by European standards they are micro and small. In this short time, they have not built up all the marketing skills that they need.
By joining together, they become medium-sized enterprises and can draw on each other’s synergies.
Our smaller enterprises still have to get used to the fact that they now form part of a European market, not only a Maltese market.
We are in the second year of Malta joining the Euro area. Is industry feeling safer with the currency risks?
I would say yes. In retrospect, we can thank god that we joined at that time. In the situation we are facing nowadays we would have been under much different pressure if we were to use our currency. Adopting the euro has helped, even in business circles, because it makes it easier for everybody.
I believe we have made a tremendous success out of the introduction of the euro. Changeover has gone very smooth. Today if you talk to people, it’s like as if they have had the euro for a long time. People do not talk much about the Maltese Lira any more.
Are you comfortable with the Government’s deficit growth projections?
I think that Government is being prudent in trying to keep the national deficit at bay. We feel that government has put itself a very strong target and might need or might have go back on it at some point this year, depending on how the economy develops.
However I think that it is the right approach. We cannot just dish out and forget tomorrow. After all, we are building the future of our children. Somebody will have to pay at the end of the day.
I think trying to be prudent is the right approach – I think it’s better to put oneself on a good line rather than throwing it overboard.
Although last year we did not achieve our deficit targets…
That’s because in a lot of circles we hear a lot of comments on the lines of: “Forget about this deficit and just provide support…” I think you cannot just provide support. I think you need to think about issues like the deficit while providing support.
Although at the end you may have to be reasonable and flexible. At the end, whether they will manage to achieve their targets, I don’t know, but I think it’s the right approach.
We have still registered growth in our GDP in Q4 of 2008 albeit lower than Q3. Do you still think there will be growth in GDP in 2009?
The EU is forecasting a growth of 0.7 per cent for 2009, which is almost no growth at all, but if we stay within that margin, we will do well.