NEWS | Wednesday, 23 July 2008

The Attractiveness of Malta for Foreign Investments

By a Staff Reporter

Last week, 72 executives of foreign owned companies based in Malta were invited by Ernst & Young (E&Y) to participate in a survey to identify what makes Malta attractive as an investment country.
The executives came from a wide cross section of business activities ranging from Banking, ICT, Telecoms, Pharmaceuticals, iGaming and high-tech manufacturing. The size of the companies ranged from micro enterprises, with less than 10 employees to more than 100 workers. The Companies itself have different values of turnover, with more than a third reporting a turnover of more than Euro 12 million. The majority of the companies have shareholders that are EU residents and nearly a third have been in Malta only since the turn of the century.
It was encouraging to read what they see as the strength of Malta being an attractive investment country. Malta’s work force and way of life lead the good marks barometer ranging from the level of English and productivity reached by the workforce as well as the stability of the Social and Political environment. Even though Malta joined the Eurozone from the beginning of the year, this was considered as one of the pluses for being an investment destination. At the lower end of the scale, the ‘lack’ of cultural entertainment scored low in the assessment of Malta’s attractiveness.
The survey respondents also highlighted what the challenges are and listed a number of things that need to be available: from Transport links, office premises, more Human Resources as well as access to finance. It was evident, that the respondents are knowledgeable of the local environment for they highlighted as challenges issues such as shipping costs and links that are considered weaknesses and existing because of Malta’s island status.
It was appropriate to read what one top executive of a foreign – own bank stated in the survey: “Prior to setting up in Malta it sounded too good to be true… Following the setting up, it transpired that entities and institutions like MFSA and the VAT Department were indeed helpful. Hence the perception of Malta has significantly improved”.
The perception issue was also expressed by other respondents when no less than 60 per cent of the survey participants considered their perception of Malta as having improved in the past year and nearly the same state that their perception in the next three years of Malta, will improve. Statements by the executives of foreign owned companies were very encouraging. One went ahead to state that even though low cost countries are increasing their attractiveness for labor intensive production processes, Malta will still be in a position to attract investment through the development of new technologies. This was supported very well in the results of the attractiveness survey. A high 78 per cent confirmed that their firms developed or expanded their Maltase activities, and more is to come in the future.
Malta has a list of competing countries and regions ranging from the new EU-12 member states, mainly the Eastern European Countries for financial services, and island states for iGaming. The survey participants had their own advice to Government on how to make Malta more attractive. The main recommendations were for fiscal incentives, education, improved transport and less bureaucracy. To the Maltese economic operators, the main recommendation was to improve, the customer service. In the recommendations, anything dealing with waste management, alternative energy and climate change scored law.
While E&Y carried out this survey of Malta’s attractiveness, two major players gave their views of what they were aiming for in having Malta on the map for Foreign Direct Investment. The MFSA explained the feedback it gets from The Financial Sector. All recognize that our labor is well educated and the availabilities of inexpensive modern office developments together with the robust telecoms infrastructure, a competitive tax regime and a flexible legal and regulatory environment are critical success factors. The Human Resource aspect always scored on the positive side. As much as 7.8 per cent of the Malta population being graduates and another high number following specialist and vocational training programs led to this result.
Moreover, the fact that Malta has 58 Double Taxation agreements finalized or being finalized bodes will as a country open to do business with any nation. However MFSA considers that on certain areas of cost, for labour and Professional Services, Malta is on the brink of losing certain attractiveness.
Malta Enterprise also provided its views on how they are tackling Malta’s attractiveness. The entity is proud that our country has attracted a long list of world class firms in healthcare, pharmaceuticals, ICT, electronic and mechanical engineering.
Over the last three years, Malta Enterprise approved the expansion of 133 manufacturing projects and another 83 service projects. But at the same time whilst foreign projects in manufacturing were increasing, the number of indigenous projects for manufacturing firms was decreasing. All this led to a slightly reducing trend for industrial space but a higher trend in forecast employment.
The Malta Enterprise has identified that new FDI promoters look for campus style area set up for offices with centrally managed services and building facilities. There is already an ongoing exercise led by Malta Enterprise to ensure the skills availability of the workers. This in order to improve Malta’s supply chain to these industries.
Overall, the Ernst & Young Perception Survey highlighted that those overseas owned firms already in Malta, find the country attractive and would consider sustaining their perception by investing more. On the other hand, the main two entities involved in promoting Malta for Foreign Direct Investment are ensuring that the right environment and work force is around to meet any demand.