The Maltese economy is being held back by banking problems being encountered by businesses, the Chamber of Small and Medium Enterprises said this afternoon.
Presenting its proposals for Budget 2022, the chamber called for the situation to be addressed because Malta was becoming a less appealing jurisdiction to do business in with each passing day.
The chamber insisted that the relationship between small businesses and banks needed to improve.
“Rather than improving, since greylisting it has gotten more complex because of a vast amount of new rules that have been introduced. This is resulting in increased bureaucracy, delays and fees that small businesses can’t cope with.”
In this regard, the chamber proposed setting up a task force to draw up a charter for local banking services, as well as a board to which business could turn for redress in cases whether they have been the victim of disproportionate action on the part of Maltese banks.
“We are also proposing setting up a centralised Know Your Client system for different entities to use, in order for businesses not to have to fill in the same identical forms multiple times,” she said. “Having a person employed just to fill in KYC forms isn’t sustainable.”
The chamber also suggested that Malta Enterprise do more to offer soft loans to companies as a workaround to the current banking gridlock.
Asked what sort of problems members were encountering, chamber CEO Abigail Mamo stressed that a major problem was the length of time it took to open an account.
“In other jurisdictions, it takes a week. In Malta it takes nine months,” she said.
Mamo also noted that banks had recently introduced a fee related to the use of cheques. She said that while she understood the drive to shift people away from the use of cash, banks needed to offer incentives for businesses to use electronic payments. “We can’t have businesses penalised from both sides.”
A similar problem had developed as a result of new rules governing cash deposits. “There was no consultation before this change, which has impacted businesses by requiring them to use a night safe.”
“We’re seeing all these incentives to shift to electronic payment but it is having the opposite impact because businesses are opting to work with cash in order not to incur most costs,” Mamo said.
Finally, she pointed to the fact that affecting cross-border payments had become more difficult with payments that would previously have been cleared in a few days now taking more than a week.
The chamber also insisted that while it was important for the country to increase compliance with anti-money laundering regulations, small businesses should not be made a scapegoat.
“We’ve seen that the two parties owe the state millions. It is shameful and we can’t now have small business being targetted to make an example out of them,” chamber president Paul Abela said, adding that some small business owners had also been imprisoned for not paying the right amount of VAT.
“Nobody should be untouchable, but things should be done well,” he said.
Have you encountered problems due to banking bureaucracy?