English, euro Malta's main attractions for investment

An English-speaking workforce and the euro as Malta's national currency have once again been identified by top executives as being among the most important factors which make Malta attractive for foreign investment.

These criteria emerge from the latest Ernst & Young's Malta Attractiveness Survey which was launched yesterday. Last year's survey also highlighted these two factors as being crucial for investment.

The Malta Attractiveness Survey 2009 brings together the views of top executives of 101 foreign-owned companies in Malta.

The survey explored various aspects of Malta's investment attractiveness for these companies to retain, expand or develop their activities in Malta.

The level of English of the country's workforce was chosen by 86 per cent of respondents as being attractive for investment, followed by the productivity of human resources (81 per cent), the euro as the national currency (76 per cent), the quality of life as it relates to the social (69 per cent) and physical (68 per cent) environments, the telecommunications infrastructure (67 per cent), the political environment (66 per cent), the corporate tax rate (66 per cent), employees' skills (65 per cent), Malta's geographical position (65 per cent), leisure activities (63 per cent), the legislative environment (61 per cent) labour costs (61 per cent) and fical incentives and support from the government (58 per cent).

The respondents also assessed the most important investment criteria for companies to expand, develop or retain their activities in Malta with the availability of human resources (50 per cent) topping the list. This was followed by fiscal incentives and support measures from the government (43 per cent), the corporate tax rate (41 per cent), the legislative environment (29 per cent), human resources skills (28 per cent) and the euro as the national currency (28 per cent).

The criteria that are perceived as having improved over the last year include the telecommunications infrastructure (32 per cent), air transport links (24 per cent), the euro as the national currency (23 per cent), air transport costs (23 per cent), telecommunications costs (22 per cent) and the availability of human resources (21 per cent).

Bureaucracy (70 per cent) and fiscal incentives (64 per cent) were the two top suggestions by the executives as to how the government could improve Malta's attractiveness. These were followed by education and training (27 per cent), transport (25 per cent), marketing Malta (22 per cent), a clean and healthy environment (22 per cent) and energy supply and costs (18 per cent).

Among the respondents' suggestions were that government employees should work normal hours in summer, people heading government agencies should be more business-oriented, the VAT unit dealing with VAT refunds should be merged with the Inland Revenue Services and Malta Enterprise and Malta Industrial Parks should coordinate more to ensure consistency and efficiency of service.

The respondents also called for a reduction in the corporate rate of tax, a general reduction in taxes, more double taxation agreements, a reduction of supervision and licence fees by the MFSA, the subsidising of the relocation of companies to Malta from other countries, more funds for research and development through Malta Enterprise, a reduction in personal income tax, and the lowering of personal income tax for foreigners in view of the fact that there are no pension plans.

Other suggestions include the provision of more courses in finance and the gaming industry, more co-ordination between University, Mcast and industry, the improvement of technical training and more investment in IT at the University.

The need to attract other airlines to Malta was also mentioned in the survey, as was the importance of reducing freight, cargo handling and air transport costs. The respondents also highlighted the need for more investment in the country's road infrastructure and an improvement in public transport.

The survey participants called for lower energy costs, the complete elimination of power cuts, the liberalisation of the fuel market, the amendment of the law to ensure that responsible parties can be held liable for power cuts due to negligence, capping on electricity bills to industry to remain, more flexible labour market laws, a reduction in the number of public holidays, additional incentives to attract women to the labour force, more grants to encourage renewable energy and the setting up of a financial district through a public-private partnership.

Questioned about the impact of the international financial and economic crisis, 47 per cent of respondents pointed out a reduction in orders, followed by the exchange rates (18 per cent), reduced liquidity (13 per cent), a decrease in investment value, interest rates and investment income (eight per cent) and an increase in gaming activity (three per cent).

Among the government measures suggested which could help companies during this crisis were a reduction in utility rates, training assistance, a temporary tax break, a reduction in the VAT rate and the prompt payment by the government to its contractors.

Just over half the respondents expressed the view that Malta as a location to expand, develop, or retain investment activities will improve in the next three years. Seventy-two per cent of those questioned said they will consider expanding in the future, while 76 per cent said they had expanded in the last three years.

Seventy-five per cent of the shareholders of the companies surveyed resided within the EU.

The companies were selected to reflect different sizes and industries. The companies participating in the survey employ around 12,500 people and their turnover varied from less than €2 million to more than €35 million. Half of the companies in the survey were set up in Malta after 2000.

Data was gathered through fieldwork that was carried out between March and April.