“Our main priority from a government point of view should be the growth of family businesses. These represent a significant portion of the economy, and the Government certainly has a role to play in ensuring that they are able to survive the challenges they face, and realise their potential,” said the Minister for Finance, Prof. Edward Scicluna.

Prof. Scicluna was delivering the closing address of the Family Business Forum, titled ‘Ingredients of Good Business’, organised jointly by BOV and PwC and held on the 7 May 2014.

The Finance Minister said that there is no doubt that family-owned businesses play an important role in the overall Maltese economy. He noted that while it is not known precisely how many family-owned businesses are operating, as the National Statistics Office only collects data for SMEs and micro-enterprises, the portion of enterprises that are family-owned is significant.

“In 2013, out of 71,629 existing enterprises, approximately 97% are micro, that is, with less than 10 people employed in each firm, and small enterprises (10 – 49 employees) represent 2.3%. These together represent 76% of all the jobs employed by these enterprises,” he said.

He noted that in the UK, family-owned companies account for three-fifths of private sector enterprise, and while the vast majority of businesses in this sector are SMEs, there are approximately 900 large family firms, including high-profile. Overall, family-owned companies account for more than a third of UK economic activity.

Given their role in the country’s economy, Prof. Scicluna said, the Government certainly has a role to play in ensuring that family-owned businesses are able to overcome the challenges that such businesses face, and survive and grow further.

“First and foremost, it is important that micro and small enterprises hold a strong level of corporate governance. That they comply with the respective regulations and that their accounts are well kept and audited. The latter issue is one of the government’s dilemmas. While we want truly to cut bureaucracy and costs for SMEs, we should think carefully before abolishing certain regulatory requisites,” Prof. Scicluna said.

 

 

“We want to discipline firms to encourage them to follow the best corporate practices, as small as these firms may be. This is especially the case when a family-owned business comes to raising finances, or inviting in outside partners. How can this be done if the business does not have its financial affairs audited and in a proper order?”

 

Prof. Scicluna said that the Finance Ministry is currently looking into how the Government can open a small window of opportunity for family-owned businesses in terms of tax incentives to encourage and assist them to survive and grow. “However this will definitely not be an open door for tax avoidance for property owners. It will be reserved for genuine Micro enterprises and the tax breaks modest,” Prof. Scicluna added.

The Finance Minister concluded by saying that the Finance Ministry’s priorities are related to helping family firms grow, and even mature to the point that they bring in outside management and also equity funding.

“This notwithstanding, we will be consulting very closely with family firms to see what they need most. Their growth is the economy’s growth. And in this we are surely partners,” the Finance Minister said.