Thursday, 23 January 2014

Children of a lesser god

In Malta thankfully we do not suffer from gross economic inequality as Oxfam have reported to the Davos World Economic Forum, where 85 richest persons in the world possess as many riches as the bottom half of the world's population.   We do however suffer another type of inequality, which I refer to as the syndrome of labourites being children of a lesser god.

It seems that the PN still embrace a political credo that they have a God given right to be in government and that when  democracy ultimately works to put them in opposition, no matter how small or how large the electorate’s mandate, they can still claim a divine right to obstruct the government, nationally and internationally, to the best of their ability in the hope of shortening their stay out of executive power.

The European Parliament vote they forced against the IIP scheme has humiliated Malta.   The PN preferred their party’s interest to the national interest.   Contrast that to how the PL used to behave when in opposition.

Imagine if the PL rather than extend friendly consensus to the PN government over a quarter century to build our financial services sector on a stable political platform, instead exposed the PN government internationally as a beggar thy neighbour tax cheat.    Tax efficiency mechanisms to attract international business can easily be exposed as immoral and support can be gained from other countries that can be persuaded to view such schemes in ‘our gain is their loss’ terms.

The PL proved themselves a loyal opposition working in the national interest and consistently supporting such PN government initiatives to stay as much as possible below the radar of potential objectors. Not so the PN.   On the first opportunity they were asked to stand up to be counted as a loyal opposition that can be expected to support the national interest , they failed miserably.   They went to unimaginable extremes, harming the country’s interest purely to try obstruct government economic plans in the hope this will shorten their stay in opposition.   May be they dream of replaying 1998 all over again not realising that government commands a parliamentary majority nine times bigger than in 1998.  As the saying goes, hope springs eternal.

My stomach turns whenever I hear PN exponents misrepresenting the IIP as citizenship for sale.   Sale is what happens in January on most high streets.   Anyone with money can go into a shop and no questions asked buys the items displayed with prices marked down as displayed.   The IIP is not open for anyone with cash and certainly not at a discount.    Applicants have to undergo a very thorough multi-level due diligence process before they  can be short-listed as qualifying for IIP. Following that given that the quantum of IIP’s is capped, a selective process will be made by Identity Malta to choose the applicants with the greater potential for inward direct investment and deep rooted economic linkages, beyond the minimum requirements of the scheme.

How can the opposition underestimate the economic potential of the IIP?  Bring out the calculator.  Multiply 1800 by EUR 650k, ignoring all the other bells and whistles.   That comes to EUR 1.17 billion which I round down to one billion Euro to allow for administration and expenses.  That is 14% of our GDP which if one applies a conservative multiplier effect of 50% is equivalent to 21% of the GDP.   Assuming the Scheme can be rolled out over 3 years that is equivalent to 7% of the GDP p.a. for each of the next three years.  

That is twice the normal organic nominal economic growth.   Now that makes a difference.    That could make a step change to the economic growth capacity of the country without causing inflation and without any borrowing or deficit.    That could see our national debt sink back to below 70% of the GDP in a matter of few years.

And by what reasoning would 1800 IIP awards be considered as beggar thy neighbour policy by five hundred million Europeans.    If their argument is that citizenship should only be gained after a period of residency why should our colleagues in Europe fear that people who find difficulty to reside in Malta and have freedom of movement to move wherever through Schengen area, would if given citizenship without residence conditions do anything differently.  I would argue that the contrary would apply.   Citizenship without residency requirements would probably mean that the applicant will continue to reside in their country of first residence and use the Malta passport purely as an insurance policy in case threats to stability in their home country materialise.

In due time Maltese citizenship would grow on such IIP citizens when knowing us at first hand will expose the hidden benefits of doing business in and through Malta.

The success of the IIP will come back to haunt the PN and will ultimately deliver a death blow also to political inequality whereby PL sympathisers are still considered as children of  lesser god.


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