Malta’s attractions as an investment destination

Prime Minister Eddie Fenech Adami addresses last week’s trade and investment event held at the Malta High Commission in London. While citing a number of success stories in the area, Fenech Adami discusses Malta attractions as an investment location for UK and EU citizens and government policies designed to boost the crucial economic sector

It is indeed a pleasure for me to meet with you all today to discuss Malta’s advantages as an investment location.
Over the past decade and a half, successive Maltese governments have adopted policies specifically geared to tapping the country’s full potential as a competitive business location, ideally suited to servicing Europe, North Africa and the Middle East. This included major investment in Malta’s physical infrastructure in the late 1980s and 1990s. The result is that Malta now boasts of a state-of-the-art telecommunications system, an effective energy generation and distribution infrastructure, an efficient Freeport and highly-developed aviation and marine communications with the European mainland as well as North Africa.
There was, of course, major investment in our non-physical infrastructure. Foremost in this process was our relationship with the European Union. Malta has benefited from a long-standing Association Agreement with the European Union. This is an agreement that worked well over the past thirty years but in today’s context is just too limited in its benefits. Malta formally opened accession negotiations in February 2000 and, as you are aware, these negotiations were concluded successfully at Copenhagen last December, and, accession is expected on 1 May 2004. EU accession is Malta’s best option for economic growth, since, apart from automatic entry into the European market, EU membership will provide the long-term security and stability that is the prerequisite for growth in today’s increasingly inter-dependent globalised economy.
Manufacturing is one of the main pillars of our economy, employing approximately one fifth of the Islands’ labour force and accounting for about a quarter of Malta’s GDP. Our industrial structure, in line with the prevailing trend in other countries, has experienced a major shift – we have progressed from a stage where Malta was typically a low-cost assembly location, to our present status as an established high-productivity manufacturing centre.
In terms of sectors this process has seen us move away from textiles to the production of electronic components, parts for the automotive industry, precision engineering, the production of medical and pharmaceutical products and products and services in the field of information technology.
Some of the most successful companies operating from Malta include a fair number of British names, such as Dowty and De La Rue. Another example is Motherwell Bridge, a British company that has established an important presence in Malta from where it provides metal fabrication and other engineering services in support of contracts in various North African countries.
Malta can also lay claim to a growing financial services sector, increasingly geared towards providing a wide range of services in support of business activity within Europe, North Africa, and beyond. Today, many companies operate from Malta to provide a wide range of these services to the international market. The acquisition of Malta’s largest bank by HSBC is a significant expression of confidence in our financial sector.
However, these are not the only types of services for which Malta is an ideal base. Equally promising, in terms of their growth potential, are the many service activities linked to our traditional maritime vocation. These include complex conversion jobs on specialised vessels for the oil industry, the servicing of super yachts, ship repair at the Malta Drydocks, the operation of cruise liners with Malta as their base and the provision of various services in direct support of the oil industry. Much activity is also centred in the Malta Freeport, which has now become one of the busiest transhipment harbours in the Mediterranean.
We are now working to extend the services we offer to the maritime sector to aviation. We are confident that aviation services have all the potential to be developed on equally successful lines. The Malta International Airport has recently been privatised and its management is benefiting from the experience of Europe’s most successful aviation hub, that of Vienna. Additionally, Lufthansa Technic has established a joint venture with Air Malta to provide aircraft servicing facilities through Lufthansa Technic (Malta) which is already in operation.
All these developments would not have been possible were it not for the versatility and quality of our human resources. These constitute a largely English-speaking workforce that is cost-effective and competitive in terms of its ability to add value and deliver a high quality output. My Government continues to invest heavily in the Maltese educational system to ensure that these standards are maintained, and that our skills evolve in line with business and technological developments.
The productivity of our labour force has also been enhanced by the long-established practice of skills transfer – a direct benefit of Malta’s long tradition of attracting substantial foreign investment in practically all sectors of manufacturing activity. This is highlighted in the considerable experience and success that Maltese management has achieved in running the production arms of foreign multinational companies.
Over time, many foreign companies have consolidated their positions in Malta and have further expanded their investment, moving away from simple production runs to higher value-added operations. The adaptability and level of competence of Maltese management have been key elements in making such a transition possible.
These positive attributes are backed by other elements of non-physical infrastructure. These include an efficient tax system and a credible legal framework. Company law in Malta is based on British and EU practice and all relevant legislation is also published in English.
The business support infrastructure available to companies seeking to operate from Malta includes the three competent elements of what we term Malta Enterprise.
• The Malta Development Corporation – responsible for the attraction of foreign direct investment, the administration of incentives under the Business Promotion Act and the provision of factory space;
• The Malta External Trade Corporation – responsible for providing assistance to companies seeking to tap new markets; and
• The Institute for the Promotion of Small Enterprises – which supports small and medium sized enterprises in various capacity building aspects.
Malta’s economic outlook is not only positive; it is now set for the far greater opportunities provided by our forthcoming membership of the European Union.
To date, Malta’s success has depended largely on the stability and security that has been the hallmark of our national development. This factor will be consolidated by membership. EU membership will also enhance Malta’s trade relations with the enlarged EU, and will provide Malta-based firms with full and immediate access to the many other countries with which the EU has concluded free trade agreements.
EU membership will provide greater certainty for overseas investors attracted to Malta; certainty in terms of the applicable laws, in terms of standards and, in the near future, certainty in terms of currency. EU membership also means the certainty of the incentive structure offered to investors.
European Union membership will also strengthen Malta’s standing in the Mediterranean, poised as we are to become the ‘Southern Gateway’ to Europe, a hub for business activity within the Mediterranean which provides the ideal base for international companies seeking to expand their business activity in Southern Europe and Northern Africa.
We believe that there are advantages also for companies that wish to operate ‘from’ Malta rather than ‘in’ Malta. Whether it is marketing, sales and distribution, project management, customer training or after sales support, we believe that it can be done most effectively from Malta and at a lower cost than most alternative solutions.
I thank you for attending today’s event during such an exciting period in Malta’s development. I welcome initiatives such as these that strengthen the already excellent ties that exist between our two countries and their respective business institutions.
My parting message is a simple one. My Government and my country are ready to help you do more business in our region - I encourage you to take maximum advantage of this profitable reality.