Malta's attractiveness to FDI
Foreign direct investment (FDI) is very important for every country, whether big or a small island like Malta in the centre of the Mediterranea Sea. It is therefore very important that we get a piece of the cake in terms of FDI so that our economy continues to grow.
At a conference organised by Ernst & Young, Malta's attractiveness to FDI was analysed and grilled by both the panel and audience. From a perception survey that was carried out, it transpired that Malta's attractiveness is very strong in respect of its human resources, the social and political environment, telecommunications infrastructure and the euro. Some of the strongest challenges to make Malta more attractive are in air transport costs, shipping transport links and costs, research and development availability, innovation capacity and regulations and planning permissions.
The Prime Minister, in his closing speech, made a special reference to the transport links and argued the point in favour of having a national airline like Air Malta, which is a very important strategic asset for Malta's links with Europe and the rest of the world.
I could not agree more with the Prime Minister, and this is why the General Workers' Union does not understand why the government did not make the necessary investment in Sea Malta which, despite all the limitations, had given Maltese industry excellent service. Can the same be said of the new operator? The survey findings seem to suggest otherwise! But now Sea Malta is gone and there is little the government can do about the service being given!
FDI is of paramount importance and needs to be continuously sustained because the benefits are enormous. FDI is not only important because new investment comes into our country and jobs are generated but also because new technology and standards are introduced.
Today, for example, everybody agrees that the financial sector has been transformed thanks to the arrival of a major international bank that introduced new standards that spurred the whole sector to perform better and compete. This international bank put Malta on the world map in the financial sector and, as a result, attracted other foreign banks to our shores. All this must be sustained and supported as it is vital for our economy to grow and prosper.
Going international
Our country also needs to address one important aspect if we want to become a fully developed country in the EU. One of the main characteristics of a fully-developed country is that local entrepreneurs from such a country start going international. The advantages for that country are enormous. These companies usually employ a local senior executive team to help them run their overseas operations, thus giving them valuable experience and exposure.
A substantial part of the profits made from their overseas operations finds itself back in their home country. As they grow in their overseas operations they become more competitive in the local market, thus benefiting the local consumer. They are also more likely to retain their home country as the group head office, thus generating an increased demand for specialised jobs.
Unfortunately, this is a characteristic that we very much lack because very few local companies have so far taken this route. I can only think of one local company in the hospitality sector that has taken this route and has been very successful. It is making a name for itself and for Malta. There are also one or two others in the ICT sector.
The government, through Malta Enterprise, and the constituted bodies such as the Federation of Industry (FOI) need to formulate a strategy for the implementation of this new vision for Malta.
Obviously, local entrepreneurs have to do their part. They must realise that they have more chance of success in this new global market if they do not remain fragmented and operate solely in the local market that has limitations due to economies of scale. They should depart from the family-owned mentality of running the business, which is a good model while the business is small. They should consider merging with other companies in the same sphere and recruit professional managers to help them run the company. They should consider going public on the Malta Stock Exchange in order to raise the necessary finance to grow.
The government, on its part, must provide the necessary tools such as the setting up of the Venture Capital Fund that has been promised for quite some time now, and also provide logistical support through Malta Enterprise. Other companies in small countries like ours have done it. So why can't we?
Mr Carachi is president of the General Workers' Union.
Foreign direct investment (FDI) is very important for every country, whether big or a small island like Malta in the centre of the Mediterranea Sea. It is therefore very important that we get a piece of the cake in terms of FDI so that our economy continues to grow.
At a conference organised by Ernst & Young, Malta's attractiveness to FDI was analysed and grilled by both the panel and audience. From a perception survey that was carried out, it transpired that Malta's attractiveness is very strong in respect of its human resources, the social and political environment, telecommunications infrastructure and the euro. Some of the strongest challenges to make Malta more attractive are in air transport costs, shipping transport links and costs, research and development availability, innovation capacity and regulations and planning permissions.
The Prime Minister, in his closing speech, made a special reference to the transport links and argued the point in favour of having a national airline like Air Malta, which is a very important strategic asset for Malta's links with Europe and the rest of the world.
I could not agree more with the Prime Minister, and this is why the General Workers' Union does not understand why the government did not make the necessary investment in Sea Malta which, despite all the limitations, had given Maltese industry excellent service. Can the same be said of the new operator? The survey findings seem to suggest otherwise! But now Sea Malta is gone and there is little the government can do about the service being given!
FDI is of paramount importance and needs to be continuously sustained because the benefits are enormous. FDI is not only important because new investment comes into our country and jobs are generated but also because new technology and standards are introduced.
Today, for example, everybody agrees that the financial sector has been transformed thanks to the arrival of a major international bank that introduced new standards that spurred the whole sector to perform better and compete. This international bank put Malta on the world map in the financial sector and, as a result, attracted other foreign banks to our shores. All this must be sustained and supported as it is vital for our economy to grow and prosper.
Going international
Our country also needs to address one important aspect if we want to become a fully developed country in the EU. One of the main characteristics of a fully-developed country is that local entrepreneurs from such a country start going international. The advantages for that country are enormous. These companies usually employ a local senior executive team to help them run their overseas operations, thus giving them valuable experience and exposure.
A substantial part of the profits made from their overseas operations finds itself back in their home country. As they grow in their overseas operations they become more competitive in the local market, thus benefiting the local consumer. They are also more likely to retain their home country as the group head office, thus generating an increased demand for specialised jobs.
Unfortunately, this is a characteristic that we very much lack because very few local companies have so far taken this route. I can only think of one local company in the hospitality sector that has taken this route and has been very successful. It is making a name for itself and for Malta. There are also one or two others in the ICT sector.
The government, through Malta Enterprise, and the constituted bodies such as the Federation of Industry (FOI) need to formulate a strategy for the implementation of this new vision for Malta.
Obviously, local entrepreneurs have to do their part. They must realise that they have more chance of success in this new global market if they do not remain fragmented and operate solely in the local market that has limitations due to economies of scale. They should depart from the family-owned mentality of running the business, which is a good model while the business is small. They should consider merging with other companies in the same sphere and recruit professional managers to help them run the company. They should consider going public on the Malta Stock Exchange in order to raise the necessary finance to grow.
The government, on its part, must provide the necessary tools such as the setting up of the Venture Capital Fund that has been promised for quite some time now, and also provide logistical support through Malta Enterprise. Other companies in small countries like ours have done it. So why can't we?
Mr Carachi is president of the General Workers' Union.