Malta needs a clearer focus for its promotion of business competitiveness, and efforts have to be better co-ordinated if more foreign direct investment is to be attracted to the island, stakeholders have proposed.
At the launch of the 2009 Ernst & Young Malta Attractiveness Survey last week, some members of the business community complained of Malta's lack of visibility in international markets. The island was described as one of "the best kept secrets around" but differing views emerged this week about whether the country is really off foreign investors' radar.
"I don't agree Malta is quite off the radar," Malta Chamber of Commerce, Enterprise and Industry president Helga Ellul, who was on the panel at the conference, told The Times Business.
"The comment made at the conference was meant in positive light. It is a reality that the size of the country imposes certain limitations, particularly in creating awareness. Nevertheless, once people and companies eventually experience the country and what it has to offer, they realise it is a gem. The country can bank on its political and macroeconomic stability; good standard of living and quality of life; modern legal framework; access to the EU internal market, eurozone membership and EU Objective 1 status. Another advantage ensuing from Malta's small size is the easier access to decision-makers."
Finance Malta chairman Kenneth Farrugia said the recent establishment of international operations across a variety of economic sectors confirmed that investors had Malta in their sights.
"In the current economic and market environment, many business expansion plans have been reviewed and this has somewhat slowed the growth of FDIs, not only in Malta, but also internationally. Malta has, of course, not been ring-fenced from this impact and we are still witnessing a degree of FDI taking shape. This environment simply means that we need to continuously step up our promotional efforts to sustain the growth we have managed to enjoy so far."
Mr Farrugia believed Malta needed to strengthen the co-ordination of promotional initiatives to ensure a coherent and consistent positioning of what Malta stands for.
"This calls for the need to explore a national-led and well concerted promotional approach to ensure that the all promotional initiatives as effective as possible considering the funding constraints and availability of human resources," he stressed.
Mrs Ellul agreed on the need for more focus: "Any country or region needs to approach FDI attraction holistically and ensure that its structure is functioning well to enable the attraction of the right and most suited investment. Malta's resources are limited, and we should take a focused marketing approach based on our existing pinnacles of strengths.
"We should also make an effort to restructure the economy away from mass-market activities towards a carefully selected portfolio of profitable and resilient niches. Efforts along these lines are not only necessary to weather the current recessionary pressures, but also to reap the benefits of potential opportunities for growth in the medium-term, for Malta to catch up as quickly as possible with EU levels of economic development."
Mr Farrugia pointed out that the size of Malta's economy and the limited financial muscle to fund branding and promotional campaigns were also a factor. Malta's robust financial sector has enjoyed particular visibility and our banking sector has been ranked by the World Economic Forum as the 10th soundest in the world. The MFSA annual report for 2008 showed that the establishment of the new international financial services business in Malta had continued to gain traction despite the global crisis.
Finance Malta, which was set up two years ago, has organised several events to promote the country as a business investment and financial jurisdiction, including one at the London Stock Exchange in collaboration with the Financial Times. Two conferences - one in London aimed at family offices, and one in Germany for financial and credit institutions - are planned.
The Chamber is not tasked to directly promote Malta abroad but Mrs Ellul said it ensures that Malta "is well placed on the map within the international and pan-European affiliation that it holds and also during its frequent dealings with international partners and contacts." It also offers support to other institutions in selecting country target markets, organising missions and participating in delegations abroad. This even despite the current climate.
Asked which factors were hindering Malta's attractiveness, Mrs Ellul emphasised that fundamental issues for investment needed to be constantly reviewed. She cited competitive advantage as the foremost issue.
"Operational costs (or fully-loaded cost) and how these compare with other localities are of primary importance," she explained. "Competitive advantage relates, in turn, to efficient and cost-effective sea links to the main European ports (and beyond), human capital (level of education, cost and flexibility of labour), the human resources/productivity ratio, the ease of technological absorption of the Maltese worker and general infrastructure (utilities, roads access and industrial estates, among others).
"Good technical infrastructure - both hard and soft support services - are also crucial. These relate to access to testing facilities, good access to academic establishments (which have proactive links with enterprises and engage in collaborative research), access to researchers and generally the 'feel' of the innovative vibrancy, which in this case also includes clusters of enterprises focused on a particular niche sector.
"The Malta Chamber believes in the concept of a one-stop shop for investment attraction. Depending on the sector, different experts would eventually follow-up the leads. Of course, in the attraction stage, we need to "impress" prospective investors by allocating dedicated relationship managers to fast-track their project from investment approval to eventual operation."
Mr Farrugia said Malta's best assets were its human resources, its responsiveness and its legal and regulatory framework - the latter, in particular, required constant innovation if it was to be highly competitive.
The country had to strive to ensure that Malta does not face capacity constraints which will lead to wage inflation which will make the country uncompetitive.
"We must also ensure a robust yet fast track process for the licensing of new business from a regulatory point of view and appropriate set-ups from a servicing point of view to ensure that we sustain the levels of service that our international clients have now become accustomed to," he added.
A spokesman for the Ministry of Finance said the "best kept secret" claim at the conference was meant positively in terms of the value and quality Malta offered.
"The need for confidentiality imposed by the investors in Malta is very high, specifically in the financial services industry. We do have a sizable number of global companies established here which we are not able to list or promote during our public relations initiatives. Should we not maintain this stance, they will leave, and what started off as a marketing exercise would in fact end up damaging the country. Our policy is to attract a few good quality investors rather than mass marketing or advertising."
The ministry pointed out that besides the growth in financial services - in which employment now stands at over 7,000 - other service-based areas, such as gaming and manufacturing, aviation, pharmaceuticals and the maritime sectors, are witnessing a rapid increase investment, both for the quality jurisdiction and Malta's stronger presence internationally.
The EU Report on Trade and Foreign Investment placed Malta among the top five EU performers with regards to foreign direct investment inflows as a percentage of GDP, the spokesman pointed out.
Meanwhile, the Ernst & Young survey is to be distributed among Malta's diplomatic corps. A Foreign Office spokesman said that in five months, over 250 Maltese businesses had contacted embassies in their efforts to internationalise or seek foreign partners in a cross-section of sectors. In any year, only around 200 contacts are made.