Editorial

Two recent trade-related activities may not have attracted much media and public attention but they could prove to be seminal for the future economic prosperity of Malta.

The first activity was the inauguration of the new Maltese High Commission offices in New Delhi by Foreign Affairs Minister Tonio Borg. The other consisted of talks in Malta between Finance Minister Tonio Fenech and the Chinese Deputy Prime Minister of Trade, Zhong Shan.

The relevance of these trade-related developments must be assessed within the context of the prevailing world economic situation. Emerging economies seem to be handling the economic slowdown much more successfully than the more developed ones.

While the euro area registered a decline in GDP of -3.8 per cent in 2009, China posted a growth of 8.2 per cent in the same year and India saw its economy grow by a respectable 5.5 per cent. In 2009, industrial production grew by 19.2 per cent in China and by 10.3 per cent in India. In the eurozone, industrial production went down by 11.1 per cent last year. China and India are the protagonists of the BRIC economies that include also Russia and Brazil. Globalisation and a focused strategy for economic growth have seen these countries grow at phenomenal rates over the last decade, especially when compared to the anaemic western economies that are still struggling to cope with the removal of trade barriers.

The good political relations that have existed between Malta and China since the early 1970s have always helped to foster ever-growing cooperation between the two countries, despite the vast disparity between their size and cultural background.

The recent signing of a memorandum of understanding to facilitate financial services by nationals and corporations operating in China and Malta shows how trade synergies can exist in most divergent economic contexts if there is the political will to promote trade. Cooperation is feasible in other areas, including those relating to tourism, renewable energy and financial and educational services. Communications and Infrastructure Minister Austin Gatt will be promoting SmartCity Malta in China during a visit there that starts tomorrow.

India too is considered as an economic powerhouse that is increasingly shaping international trade and investment. Many consider that India's strength is more pronounced in the services sector than in the manufacturing sector. Its information and communications technology expertise is among the best one can find anywhere in the world including the US and the eurozone.

Indian companies are investing directly in the eurozone area. If Malta proves it has the right economic policies to promote direct foreign investment from the East, and maintains its cost levels below those of other more affluent EU countries, it could experience a surge in investment by Chinese and Indian companies.

To exploit such opportunities, Malta must invest in further upgrading workers' skills. This responsibility falls not only on the shoulder of the government but also on that of private industry that needs to dedicate more financial and human resources to training.

Businesses choose to invest in a given country for a number of economic factors that relate to profit maximisation. The trade winds blowing from the East could bring economic benefits if Malta can offer such critical success factors.