Competitiveness � luring the Genie out of the bottle

Source: Mr George M. Mangion¸ PKF Malta

As published on The Malta Today on Wednesday 30th April 2014




The issue of the latest World Bank report ranks 189 economies on a number of economic benchmarks including a study of ease of doing business. This shows Malta reaching the 103 rd place exactly behind Costa Rica (down from 100 in 2013) when assessing the ease of doing business.

The report talks about our gross national income per capita reaching id=”mce_marker”9¸760¸ which it rates as high-income category. Another important benchmark is the ease for new firms to register for electricity which is ranked quite low at 163 (out of 189) and here it lists the procedures how to carry out such an application.

 The process starts when the client’s engineer sends a letter to Enemalta to inform about the requirements of the new connection and a reply is expected to take   35 calendar days. Secondly it takes Enemalta 14 days to inspect the site with the client. Another 3 months pass for the client to receive and sign the quote and for Enemalta to carry out the external connection against a fee commensurate with the size of the installation.

It is then the turn for MEPA to inspect the premises to deliver the compliance certificate that¸ baring any complications¸ usually takes another 28 days. Finally after 11 days¸ the client pays €900 on a formal application to ARMS and Enemalta’s engineers come to install the meter and do the final connection. This is quite amazing considering that the whole process ranks Malta at almost half way down the bottom at 115 (last year 113).

Equally labourious is obtaining credit for SME’s which the World ranks us at 180 (last year 177). But it is not all doom and gloom and the time it takes to pay taxes registers a high ranking of 27. This is defined as the time it takes to prepare¸ file and pay (or withhold) the corporate income tax¸ the value added tax and social security contributions (in hours per year). Equally beneficial is the time it talks to do trading cross border which ranks 34 meaning the time necessary to comply with all procedures required to trade goods.

 Overall one can conclude that the World Bank ranking makes interesting reading and gives a subtle warning that we face present challenges looming ahead but equally mentions considerable opportunities. Whilst the closer integration of the world economy has magnified the impact of the Euro crisis¸ countries which reform their structures stand a better chance at speeding up the recovery¸ as demand from the countries that first return to growth will lift exports from¸ and thus production in¸ their trading partners.

In its annual report the World Bank has issued a clear warning to those who harp about how well the island did in the wake of the global recession¸ and declares that the economy is enjoying a cyclical upswing¸ but the questions if it is sustainable unless urgent reforms are carried out (typic