Thursday, 15 October 2020, 08:45
Last update: about 51 seconds ago
Economy Minister Silvio Schembri highlighted that bank deposits skyrocketed during the pandemic, as there was so much uncertainty. The Covid-19 vouchers were introduced to help people overcome that fear and spend, he said, while adding that 81.2% of these vouchers were used.
An event revealing the findings of a survey about the Covid-19 vouchers was held this morning.
The survey was presented during a business breakfast entitled ‘Using vouchers to regenerate the economy’. The business breakfast is being held by the Ministry for the Economy, Investment and Small Businesses and the Malta Investment Management Company Limited today. The Malta Independent is the official media partner for this event. The event is moderated by The Malta Independent’s Editor-in-Chief Neil Camilleri.
The Covid-19 vouchers were issued in July, and were one of the more popular economic measures introduced by the government to try and limit the economic impact of pandemic on the islands.
This newsroom earlier today revealed that 85% of people say that the Covid-19 vouchers helped them and the economy as a whole. The survey was conducted by statistician Vincent Marmara.
Minister for the Economy, Investment and Small Business Silvio Schembri was interviewed during the event.
The minister spoke about the voucher initiative, and said that prior to the pandemic, the economy was moving ahead fast with the tourism industry doing very well. “Suddenly, we had to lift the handbrake.”
He said that the initiative cost around €44 million. “We wanted to introduce a strong measure, which cost €44 million over three months, and which incentivised people to go out and spend. We did not have liquidity problems among families as they were strong financially from the success over the past years, but there was uncertainty and fear. So while we were working with the authorities to issue protocols to make workplaces safe, we also wanted to remove that fear, for people to continue with their normal lives.”
The minister said that one needs to create measures that plan long-term, adding that strong restrictions over a long-period of time are counterproductive. “So we wanted to create a measure that can be used over a few months, and that gets people to go out… and that is what it did.”
He was asked about the reason for the voucher scheme, rather than just giving cheques to people. He said that during the pandemic, deposits in the banks rose disproportionately. In the 7 months of the pandemic, deposits in banks were €1.1 billion higher in August than the same month last year . It would have been easier for us to give a cheque to people, but we knew that if we did that, they would have gone into people’s savings. That in itself is not bad, but this is not the measure we wanted during this difficult time.”
The minister gave a breakdown of voucher usage. By 14 October, 98% of Maltese residents had the vouchers delivered to them or had or collected them. For EU residents this number stood at 65.2% and for non-EU residents 82.7%.
By 14 October, 1.81 million vouchers were used from the total of 2.23 million issued. So voucher usage is 81.2%, he said.
The peak usage was during weekends and the record number of transactions was on Saturday 8 August (54,000 vouchers), equivalent to €1,080,000
He said that a total of 5,720 outlets received vouchers.
For every €20 blue voucher used, an additional €16.42 was spent, he said, highlighting the multiplier effect. The total spend generated stood at €12.4 million, he said.
For every €20 red voucher used, an extra €7.16 was spent, he said, adding that the total spend generated was €40.2 million
On Gozo, he said that the measure helped attract internal tourism. When having announced it, “we thought it would be very positive for Gozo,” he said. Gozitan restaurants said that they nearly reached last year’s levels, which was a record year, the minister added. Vouchers accounted for 70% of Gozitan restaurant income he said. Gozo suffers from double insularity, and so such measures help such businesses, he added.
Asked whether another round of vouchers will be issued in the budget, the minister said that the budget has a wide array of sectors it needs to affect, more than the regeneration plan launched in summer.
“The budget needs to look at pensioners, infrastructure, the environment etc. So we need to see that even if measures like the vouchers are reissued, they need to be done so in a wider scope.” He said that the aim of the summer plan was to save jobs, “and it seems it worked, but now we need to look at working the economic engine.”
He said that the coming months will be a challenge, and said that next year the country needs to start moving forward to adapt measures accordingly. “So any measure that will be announced will be done so in this ambit, the need to adapt to a new style of life, and on measures that not only help businesses stay alive, but for investment to occur.”
Asked what would be different if a 2nd scheme were to be reissued, he said that they would use more technology for more direct access. “In the short period, the team that worked on this did a very good job. The logistics involved int he Covid-19 voucher scheme were out of this world. We created software for it, created payment systems etc. We saw more than 450,000 receive vouchers in the period of 4 weeks, and had to ensure that they included security features not to be counterfeited.”
The minister said that businesses had to move towards becoming more technologically oriented. “Covid-19 was an opportunity to test things that we did not have the courage to do.” He spoke about teleworking as an example, where every business was nearly constrained to using it. “Today we meet with businesses who praise just how well it worked.”
Statistician Vincent Marmara presented the results of his survey.
In terms of vouchers and the economy, he said that 85% of the population said that the vouchers helped them personally and also helped the economy. He said that the 85% was across all demographics.
Asked whether they used the vouchers themselves or gave them to others, around 90% said they did and around 10% said they gave them to others.
Pensioners were the ones who least used the vouchers themselves, although 84% of them did use the vouchers themselves, he said.
Asked whether they want the vouchers to be reissued, around 96% said yes, he said.
Asked how comfortable they are with going out to restaurants and to shop, told to give a number between 1 (least comfortable) and 5 (very comfortable), the average was 2.78, he said.
Asked for the best times to use the vouchers, he said that the absolute majority, 54%, said Christmas time. 17% said any time, winter 2021 saw 9% suggest this, 6% said when Covid-19 passes and for 5% said summer 2021. The rest answered a number of other options
Asked how they would use the vouchers if reissued, the majority of respondents said they would on any kind of shopping – 35%. 25% said that they would spend the vouchers in the same way they were.
In terms of changing the delivery of vouchers, the majority – 83% said they wouldn’t change anything.
The topic for the first panel was ‘How vouchers were received by businesses and seeking the right balance between retail/services and the restaurants and accommodation industry’.
The panel was made up of Minister Silvio Schembri, Chamber of SMEs CEO Abigail Mamo, Chamber of Commerce CEO Edward Chetcuti, Malta Hotels and Restaurants Association Restauranteur Representative Isabelle Debattista, Gozo Tourism Association CEO Joe Muscat.
Debattista said that the vouchers helped restaurants as they encouraged people to go out. “The vouchers are part of a whole package. The wage supplement helped us save jobs,” she said, stressing the need for the supplement to be kept. In winter, surveys show that fear will rise,” she said.
Muscat said that the vouchers were more needed in Gozo than Malta due to the double insularity. He spoke of Gozo entrepreneurs all being in favour of the vouchers.
He said that in 10 weeks around 207,000 vouchers were used in Gozo. 67% of Gozitan establishments said that their turnover was from the vouchers, he said.
Minister Schembri spoke about the wage supplement. He said that the government support can never replace economic activity. The scope of the regeneration plan was not to replace profits, but to help businesses with their expenses. The wage supplement, he said, the government is providing a safety net to 100,000 employees, the worst hit by the pandemic.
He said that uncertainty causes concern as the whether one invests or not, and the government needs to provide the carrot for people to invest.
He said that the government inherited a near-dead economy, mentioning the debt back in 2013.
He said that over the past years, debt was reduced and economic growth was observed. “We know how to awaken the economy, and that is what we want to do through this budget.” HE said that this is the time to stimulate the economy.
Mamo spoke about the Christmas period, and said that the perios is when businesses look forward to it in order to make up for slower months. “Right now there is uncertainty and a lack of confidence by consumers.” She said that when the Covid-19 numbers rise, less people shop. “Businesses are concerned about how to save the Christmas period and how to have a successful period.”
She spoke about the limited number of tourists this year, which also affects business she said. Speaking about the vouchers, she said that one proposal she made was for vouchers to be more balanced if they are reissued, she said, referring to the amount allocated for the red and blue vouchers.
Chetcuti spoke of the need to keep the workforce ready for when Covid-19 passes, in order for businesses to hit the ground running. Chetcuti said that support must not be done through handouts but through business plans etc. He also spoke of the importance of upskilling and reskilling the workforce. On vouchers, he said he is in favour of them being reissued, but “let the demand affect supply.”
The second panel’s topic was: ‘How vouchers can generate more spending in the economy’.
The panel was made up of MIMCOL CEO Stanley Mifsud, economist Dr Philip Von Brockdorf, Malta Tourism Authority Deputy CEO Carlo Micallef, entrepreneur Romina Micallef, entrepreneur Mariella Scerri, and Matthew Pace from the Association of Catering Establishments.
Mifsud spoke about the challenges of the Covid-19 voucher scheme. He said that MIMCOl had to think differently, how to respond to questions by businesses with regard to scanning vouchers and implementing the system. He said that there were a continuous stream of questions by people, and amounted to 6,000 emails which they had to answer in a short amount of time.
Von Brockdorf spoke about the multiplier effect of the vouchers. He said that the vouchers were temporary and were a stimulous for the economy. He spoke of the importance of now looking forward and sectors adjusting to the new reality. The pandemic could be here for months and can become an endemic, he said, stressing the need to adapt.
Carlo Micallef said that having Maltese in hotels gave the tourism sector the ability to keep people employed and keep their high standards. He said that August tourism left €95 million in the economy in August.
Romina Micallef said that vouchers helped the luxury sector, although Valletta still struggled. She said that nobody knows what kind of Christmas the country will have. “Planning is a major problem. The government helped a lot, even with our cash flows, but uncertainty is rising each day.”
“Long-term planning is difficult,” she said, adding that she wants the vouchers to be reissued adding that she would like to see them more geared towards the retail sector. She also said that businesses are not sure how to handle Black Friday.
Scerri said that the vouchers helped. “If there is a second round they would be very welcome and I also would like to see retail sectors on the same level as others.” When vouchers were issued, the situation is different than today, she said, adding that it was during a time when Covid-19 cases had reduced. The situation now is far worse in terms of the virus than when we had a lockdown. So the uncertainty leading to Christmas is must larger than before.” She said that “we need to plan long-term and react, as the retail sector, by going online. “
Pace said: “November to March, excluding the Christmas fortnight, is the low season for the hospitality sector. So the social distancing of 3m inside is a detriment to restaurants who serve indoors,” he said. He spoke about the idea of investing in Perspex to close the distance if allowed.
On vouchers, he said that impact was met and the incentive was good.
MIMCOL Chairman Adrian Said had delivered the opening address. “The scope of this business breakfast is to discuss the vouchers’ system and how it can be re-implemented and ameliorated, for there to be a second round of vouchers that are more effective.”
Said said that the vouchers system was developed by the economy minister and his team, as well as the government in general and agencies.
He said that the vouchers system contributed for 26% of all restaurants’ income in Malta, and in Gozo had even more success, contributing for 67%. This shows the success of this system, he said.
Said explained that people, when there is an element of uncertainty, tend to save for a rainy day. “The dilemma of policy makers was how to create a system, to create something that is used in the industry.” The vouchers system saw the government invest in the economy and helped keep jobs, he said.
Photos Giuseppe Attard