Clear, stable laws - top attraction for foreign investors

Malta's clear and stable legislative environment emerged as the most attractive criterion in the Ernst and Young report on the country's attractiveness as an investment destination.

In all, 95 per cent of those surveyed rated it as the most important factor. The level of English, the clear and stable political and administrative environment were also considered top priorities.

However, other factors that are often promoted in Malta's marketing - such as our geographical location - were given tepid ratings, perhaps a sign that technology has made the concept of physical location irrelevant.

Only 20 per cent ranked access to finance and availability of research and development as attractive. The cost of transport was only ranked as attractive by five per cent of those surveyed (for both air and sea) with 35 per cent saying it was not relevant to their company's business.

The survey was carried out in April and May of this year among 29 executives of foreign-owned companies based in Malta. Of these, 70 per cent developed or expanded their activities in Malta in the past three years. Two-thirds are considering expanding in the future.

"It is interesting that one top executive mentioned that, although Malta can provide positive results, it takes time for the management of the parent company to understand the benefits that Malta can offer the Group. If the strengths of Malta take time to be appreciated by the foreign parent company of an enterprise already established in Malta, then much harder work is required to attract new business to Malta," Ernst and Young Malta managing partner Mario Galea said in the foreword to the report.

The report also asked whether their perceptions had changed and 45 per cent responded that Malta's attractiveness had improved or significantly improved during the past year. A quarter saw no change while a fifth saw a deterioration.

Half of those surveyed said Malta's attractiveness would improve or significantly improve over the next three years while 15 per cent thought it would deteriorate.

The companies were also asked what could be done to improve the situation. Among the many items most frequently mentioned (by 15 of those surveyed) were:

Better tax and fiscal incentives; higher quality office space at subsidised rent; free logistics assistance to Gozo; incentives for services activities linked to financial services; subsidised energy bills; retaining the Business Promotion Act and reliable shipping links. Joining the euro, better health care and pension reform only got one mention each.

Commenting to The Times, Mr Galea said that the results were still positive, even though there had been a decline since the previous report (this is the third for Malta).

"The report identifies the gap between the requirements and availability of human resources but also identifies appreciation of the efforts being made to close that gap," he said.