Balmy days ahead as greylisting lifted

Malta’s removal from the grey list is indeed a positive development in the long journey to restore Malta’s reputation among the international community.




Malta Independent


It goes without saying that a country with a strong reputation attracts more tourists and foreign investment, increases exports, engages the public, attracts knowledge and talent and brings support from various stakeholders. The welcome decision of the FATF about Malta should spur the government to undertake a broad-spectrum project to revamp the country’s reputation. For a start Trade Malta and Finance Malta ought to use their promotional abilities and help their members book international conferences. In the past year, many have assessed the impact of greylisting from the perspective of its potential impact on direct foreign investment. The nation’s branding is undoubtedly a crucial strategic tool to enhance a nation’s global competitive advantage. On another level, FDI once attracted should find a welcome base in Malta including availability of factories by Indis (previously Malta Industrial Parks). This is welcome news as the economics minister announces it will create a demand for more trained workers. A Catch 22 situation follows considering the current shortage of trained workers. These are becoming more scarce on the Jobsplus register. Observers at Castille rejoice telling us that FAFT’s main issues, which led to greylisting, involved lax controls by regulators on AML/CFT issues, leniency on tax dodgers of preferential lineage and dubious accuracy of UBO registers kept by MBR. The forced resignations at the top, in both the MFSA and the MGA, have badly shaken confidence. Such wounds inflicted take time to heal. As a consequence, banks are expected to tighten their governance mechanism and invest in sophisticated systems to improve their understanding of risks and supervision when on-boarding a new business. Moving on, we hope that the autumn budget will propose adequate compensation for pensioners and those living on a low income. In the past, many lamented that the cost of living award of €1.75 per family was inadequate. Some commentators predict that anything below €8 weekly will not be enough. Caritas continues to push government to consider announcing a living wage index as is the case in the UK. It is a paradox how we hear statistics showing thousands living on the poverty line when at the same time high street supermarkets are brimming with shoppers shopping until they drop – burning their credit cards to the limit. Is there a two-tier economy running in parallel? Party apologists wax lyrical nostalgically reminding us how during the term of Joseph Muscat as prime minister, he managed a brimming economy with full employment and a high feelgood factor. Nobody doubted they were the “best times ever” pointing to restaurants and pubs brimming with diners while champagne flowed at corporate parties. In reality, the disparity between the fat cats (sporting Ferraris, sailing holidays to nearby islands or others sipping aged single malts relaxing in luxury verandas) and the working classes is getting wider. Ideally, this imbalance is reduced and attempts are made to reach a wider distribution of wealth. As they say, Rome was not built in a day and it is well documented that the elusive trickle-down mechanism takes time to work its miracle cure. A chronic malady is in need to combat rising rents and energy bills which can be a social curse particularly for tenants earning lower income or having large families to sustain. As always, pensioners come in with a load of demands. There is a general consensus that the statutory two-thirds capped pension mechanism is not adequate unless supplemented by external income. To analyse this issue, four years ago PKF designed a number of “one-to-one” questionnaires and ran a confidential survey among residents in old people’s homes in three government-run centres. Not surprisingly, when one breaks up this data by age group or household type, one finds that the above mentioned “feel good factor” has not benefited everyone. Sadly, the inadequacy of the current minimum wage and past COLA adjustments affects different types of distressed households, including single parent families in low-paid employment and elderly couples with insufficient income to cope with daily living expenses. Perhaps the discussion in MCESD, ahead of the budget announcement, will influence the purse strings of the finance minister in time to announce a serious reform in the mechanism of COLA and propose a reduction in VAT. George M. Mangion is partner in PKF an audit and business advisory firm