Larger than life, often splitting public opinion, Malta Developers Association’s President Sandro Chetcuti rarely minces his words. As a new decade dawns, he shares his honest opinion on the state of the building and construction industry.
Whilst the political situation at the end of 2019 was fraught with uncertainty, he remains optimistic for 2020. Design & Build finds out why.
2020 needs to be seen as a new page in a new chapter for Malta, where the positive results that were achieved so far will continue to be further built upon, always looking in the longer term.
The industry and the Association have in the span of a few years garnered valuable experience. From this, it is imperative to understand the lessons learnt; the positive and the negative, and particularly so in the case of the latter, when the most natural thing to do would be to hold back on any action.
Chetcuti is known to try and take a fair and balanced approach. He explains that he does not want the industry stakeholders to end up in a situation where everything stalls, or else, even worse, nothing is learnt from the mistakes made and therefore one keeps on going on as if nothing has happened. This is definitely not the course the Association wants taken.
Malta’s reputation has suffered. Towards the end of 2019, Malta was in the international news for all the wrong reasons. Chetcuti sees this as a big slap in the face. He explains that the building and construction industry is the first to be affected by the political instability the country has been faced with.
If investor confidence in the country’s politics declines then demand will slow down. There are no two ways about it. One has to consider that the ‘beneficiaries’ of this would not just be the building industry but also those subsidiary industries which provide ancillary services to it. And let’s not mention the indirect slowdown of the economy in general, reduction in consumer spending power, and so forth.
If investor confidence in the country’s politics declines then demand will slow down.
So, is this something that could realistically happen in 2020?
Well, it is no rocket science – yes it could happen. But then it wholly depends on how the whole situation is handled. And when one says handled, it must be done so appropriately with the proverbial kid gloves. If one acts fast to rebuild the bad reputation that Malta have garnered on an international plane, the damage can be contained and repaired.
Unfortunately, perception is something that can be blown out of proportion. The few who cause damage tend to taint the reputation of the majority of those whose work is all above board. “The few individuals that cause damage to the industry can be traced to the same small circle of people who have been operating in the industry for decades. These are the ones that ride on the political bandwagon for their own personal gain resulting in politics and policies being compromised.”
Chetcuti is confident that the majority of entrepreneurs are honest business people who play by the rules. So the industry will need to rely heavily on them to redevelop the confidence and feel-good factor to regain a good reputation abroad. Technology, particularly social media, can be used to Malta’s benefit, enabling positive outcomes to quickly translate into good news.
So what would the recommendation be for entrepreneurs in 2020?
There should definitely be a slowing down approach, particularly in the initial months of the year. It is imperative that the industry works together so that further negativity is not created. Over-exposed investments are also to be avoided; such a situation would prolong recovery. So the best strategy, in Chetcuti’s opinion would be to consolidate operations and work towards bringing back that feel-good factor that was felt in the earlier months of 2019.
2020 has brought in new administration, and a new prime minister. These changes will bring with them opportunities to do things better. “Where there is good, positive energy then we must build on it, where things are not doing well then we must not be afraid to speak up and make people aware. The Malta Developers’ Association has always stressed the importance of achieving the common good, where benefits are reaped by all and not just a few favoured individuals. This must not happen again.”
2020 has brought in new administration, and a new prime minister. These changes will bring with them opportunities to do things better
Chetcuti feels strongly about the impact that such individuals have left the industry with. Repetitively, these people have benefited from aggressive incentives that were deemed to be developed for them. These actions have of course caused upset, disbelief and negativity amongst those people who, though not falling within the poverty line, were not living comfortably, required help to obtain social housing and ended up not yet getting that assistance.
Technology, particularly social media, can be used to Malta’s benefit enabling positive outcomes to quickly translate into good news.
So does the Association have any insight as to whether the new administration will apply the policies currently adopted in the industry, an industry which was considered to be the driving force of the Maltese economy?
Chetcuti is adamant that if Government does not continue to believe that the construction industry is the backbone of local industry and perhaps take a more populist approach, by creating excessive bureaucratic procedures, resulting in things not being done, then the government will have a major problem in keeping Malta’s finances adequate and the economy booming. Employment levels would be affected if this approach is taken and the negative repercussions would be immeasurable.
if Government does not continue to believe that the construction industry is the backbone of local industry … then the government will have a major problem in keeping Malta’s finances adequate and the economy booming
Chetcuti is of the opinion that a Government should be surrounded by people whose personal interests do not come first before those of the country. Politicians should be well paid – one cannot expect ministers to work on a 247 basis without their remuneration being in line with their responsibilities. This is not acceptable as it gives possible cause to straying out of the path of righteousness. Similarly, Authority board members who have to take some very challenging decisions – that impact the economy and well being of the country, should also be paid in tandem with the roles they perform. “You cannot expect people in positions of high responsibilities to not be remunerated properly. If we want good, honest people, ready to give their dedication, commitment and expertise to full use, then the least we can do is remunerate them justly.”
Other economy-contributing sectors would be adversely affected by a scenario wherein the property industry loses its stride.
So back to the construction challenges being faced, the next question would be whether there are lesser risk areas in which to negotiate? For example in the case of apartments, if Malta has a slow down in the economy, where foreign investment is reduced, would there be particular areas that would be initially affected? And would the Association want to advise entities to stop building apartments and start building semi independent villas, which could prove to be less risky in an economic downturn?
Chetcuti explains that the reduced appetite for investment is felt across the board – wryly he comments that the only ones to have a possible positive outcome would be legal consultants, due to increased litigation and less liquidity causing debt collection procedures to come into force.
If we want good, honest people, ready to give their dedication, commitment and expertise to full use, then the least we can do is remunerate them justly
Disposal of construction waste was a hot topic in 2019. Could it be the case if the rhythm slows down that the problem will automatically diminish?
Chetcuti’s response is that in all fairness there are now a number of quarries that are operating such a service, but as is the case with free economies, there is an issue with pricing, which is seen as exaggerated. As to sustainable pricing, Chetcuti explains that if this is not absorbed by the buyer, then it will remain high. Whether the buyer is able to cover such costs, Chetcuti says, depends on their liquidity.
Conclusion
Summarising the situation, Chetcuti compares the industry as a ship being caught in a tsunami, where the ship is faced with big challenges to ensure that it does not sink. Although the bad weather had been approaching for a while, it was still in the distance. The current political situation fed the weather and induced far harsher climate than that which could have been expected.
Malta had better get cracking and wholly clean up its act – and image – as otherwise foreign investment will stagnate, thus affecting a vast range of sectors contributing to its economy. And prime contenders to this factor are the construction, property and interiors sectors.
If there is demand, then there will be jobs with good working conditions. Simply put, if the demand returns to its high levels then revenue across the board will be reflected accordingly.
If conditions are tightened, particularly for the middle class, then this would result in less revenue streams and this is when problems would kick in.
Chetcuti and the association he leads enter 2020 with feet firmly grounded. It is vital that mistakes are not to be repeated and hard work has to be done. But this is not enough. Increased effort has to be put in more than ever, to ensure that normality is brought back. Chetcuti emphasises the need for less egoism and greed, stronger policies, honesty, ambition and integrity.
The storm may have blown away the seeds that were painstakingly planted, but now it is time for Malta to stand up and be counted. This is a set back that requires sleeves to be rolled up and seeds to be replanted so that fruit is borne again.
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