SPEECH DELIVERED BY THE MINISTER FOR ECONOMIC SERVICES PROF JOSEF BONNICI AT THE PRESENTATION CEREMONY OF THE AWARD FOR THE ACHIEVEMENT IN INDUSTRY, AT THE SAS RADISSON BAY POINT HOTEL, ST. JULIAN'S.

It is always a great pleasure for me to attend the annual presentation ceremony of the ‘Awards for Achievement in Industry'. As appropriate, my first greetings go to the winners of this year's awards and to the Chairman and members of the organizing committee. Thank you and well done.

On such occasions, as one would expect, the spotlight falls upon the award winners. However, I believe that it is all of Maltese industry that is sharing the centre stage this evening.

Unfortunately, there are many people who have very little contact with our manufacturing industry and who have a tendency to underestimate the achievement of our industrial sector. Most of these are not sufficiently aware of the high level of quality that characterises much of our industrial output, nor of the vast expertise that exists within our manufacturing firms. This is one of the principal objectives of this presentation ceremony; namely to highlight the achievements of our industrial sector by focusing upon some of the more deserving success stories.

This has been quite a successful year for the manufacturing sector in Malta. Not only have output, exports and value added increased over the last twelve months but so has also the number of full time employees, by almost 600 additional jobs. In the first six months of this year investment in manufacturing amounted to Lm36.5 million, double the amount registered in the first six months of last year when investment had reached Lm18.5 million. The comparative figure in 1998 was Lm10.6 million.

Most of this increase has been generated by existing companies that have been expanding their activity in Malta. This is a very encouraging sign since it shows that industrial activity in Malta is still competitive internationally. Our present challenge is to publicise adequately our success stories as one of the most effective ways to attract new investment to Malta.

Undoubtedly, investment promotion has become a greater challenge, in view of the growing international competition from a number of sources. First and foremost from the Central Eastern European countries, which have shed their Communist shackles and are fast improving their infrastructure on the way to EU membership. Secondly from some of the North African countries that have adopted more liberal economic policies that have facilitated the influx of foreign capital. And thirdly also from even more distant countries, especially in the Far East, as a result of the great strides that have been made in transport and communications.

These and other considerations have led us to undertake a major revision of the Industrial Development Act that will be extensively amended and made more flexible and broader in scope to provide for a more effective package of incentives for existing as well as new firms.

Last Friday I had the opportunity to present these proposed changes to the IDA. to the social partners, during a special meeting of the Malta Council for Economic Development. I am happy to say that our presentation was well received and I am confident that, in a very short time, it will be possible for us to finalise the revised IDA and to table it for discussion in Parliament.

In very generic terms, the salient characteristics of the revised legislation will be the following:

It will be given the format of an enabling law, to be known thereafter as the Business Promotion Act. This will confer additional flexibility since much of the detail within the provisions of the act will be covered within legal notices that would be updated as necessary.

Companies which are the beneficiaries of one or more of the incentives under the present IDA will retain their current status in line with the principle of legitimate expectations.

All reference to export activity as a limiting condition will be eliminated and the relevant incentives will be available to all qualifying companies, whether they are export based or whether they produce for the local market.

Some of the principal incentives will target particular sectors that appear to provide greater scope for future growth and development. Companies in these sectors will be eligible for a reduced rate of tax and for a very attractive investment tax credit scheme. These incentives will not only be applicable in the case of new activities but will also be open to existing companies.

Companies in the other sectors will be able to benefit from a value added incentive scheme and will be eligible for investment allowances that have been improved over similar provisions that have been applied up to now.

It is our objective to have this legislation enacted by Parliament before the end of the year.

We are confident that we will have in our hands a flexible and powerful tool providing a very attractive incentive package that will benefit, in particular, firms with clear investment plans, with high value added potential and operating in the kind of technologically advanced sectors that we would like to see expanding.

We see the Business Promotion Act as a tool with which we should be in a position to attract new investment to Malta and with which you will be able to consolidate and build upon your present success.