NEWS | Wednesday, 11 June 2008

Tonio Fenech addresses IFS Seminar

Excerpts from the opening speech delivered by Finance Minister Tonio Fenechat the IFS Annual Seminar held last week

The financial turmoil taking place in international markets is certainly of interest to us in Malta and we cannot be complacent about it. With the complexities and sophisticated inter-connectivity of today’s financial instruments and markets, it is no longer possible to ignore such international crises. What started out as a problem of the sub-prime mortgage market in the United States, has quickly spread to other areas of finance and other parts of the world, not just affecting financial institutions but also economies as a whole.
That is why I would like to commend the Malta Institute of Financial Services for taking the initiative of organising this year’s Annual Seminar on this topical theme. I also take this opportunity to welcome the invited guest speakers, who I am certain that with their expertise and experience will provide invaluable insight into the global financial and economic situations taking place and advise what we can learn from all this.
With a Gross Domestic Product of around €4.9 billion and a population of some 400,000, Malta is the smallest and most densely populated European Union Member State. Malta recorded a GDP growth rate of 3.8 per cent in 2007 which continued on the positive trend of recent years. While the transformation of our economy continues with large amounts of FDI coming in and new ventures launched, we are not immune to the impact of international developments.
We have one of the most open economies in the European Union and therefore face a constant challenge as we are prone to volatility and highly sensitive to external events.
If one looks at the international financial press these days it is full of stories about inflation, the spiraling price of fuel and grains, interest rate movements, the weak US currency, steep downturns in property markets, the collapse of banks, and talk of recession, stagflation and a myriad of other economic related factors.
In the wake of the international financial turmoil, the regulatory framework within which the financial services industry operates came under close and intensive scrutiny of the key stakeholders in this industry - the operators themselves, Governments and regulatory and financial authorities. In addition to this, a strengthened and widened regulatory framework is being discussed intensively at a European level. Malta is closely following this discussion and is contributing actively to the development of an improved regulatory framework for this important area.
We therefore have to strive forward with caution as, whether we like it or not, these are the realities we have to learn to live with and it is in our best interest to be prepared for them. Considering the importance that financial services play in our economy, you can rest assured that we are committing our available resources to see this sector keep flourishing. Indeed, government has always considered financial services to be an area which had great potential for Malta and it has played an important part in the modern evolution of the Maltese economy.
Today, I am happy to note that Malta is gaining international recognition for its excellent service, competence, technical infrastructure and legislative and regulatory frameworks in this area. Naturally, such reputation as a successful international financial services centre resulted from strategic planning for the restructuring and evolution of our economy, lead by Government, with the cooperation of industry leaders and the other stakeholders.
Today we have a dynamic and well functioning financial services sector that has the necessary competence, resources and potential to grow even further. Financial services mean thousands of jobs and a significant contribution, 12 per cent to our GDP. And we want this figure to keep growing and that is why Government’s strategy is to refine and perfect all aspects of Malta’s new economic landscape. We have enhanced educational services to include structured industry-focussed courses, we expanded the island’s technical infrastructure and we have also drafted legislation and regulations that meet stringent EU standards.
At the same time we addressed industries’ needs and implemented policies conducive to business, while creating a dynamic and proactive operational environment for any company that decides to invest in or do business with Malta. Naturally we will keep working towards improving these conditions.
The financial services sector is set to continue to play a fundamental role in the development of our economy and its future well being. In recent years we have seen the sector develop into a number of innovative high value added areas and this has helped Malta become an attractive international domicile for business. In this context, the setting up of FinanceMalta as an autonomous entity to promote the Islands’ financial services brand, both within, as well as outside, Malta’s shores is another positive development which is leaving the desired results. Government remains committed to the further expansion and growth of the financial services sector with the aim of establishing it as a reputable global centre of excellence.