Towards a policy of efficacy
Attracting Foreign Direct Investment (FDI) to Malta should become a targeted effort, as gone are the days of wasteful, politically motivated initiatives.
Over the past 40 years, we have been relatively successful in attracting FDIs, however times have changed and it is high time for us to polish our strategy, or maybe even change it altogether.
Attracting FDIs is no longer the kudos of a few countries. Most nations have established their own promotional agencies, all interested and focused on achieving the same goal.
Our strategy needs to change as the old ways will not deliver the results that are so vital to the nation to fully emerge from the recession and compete in the world market.
We need to understand today’s playing field, know our strengths, but also be aware of our limitations and weaknesses.
We do have the required competencies, but occasionally also suffer from ‘delusions of grandeur’.
It is crucial for us to remember that, though we are geographically situated in the middle of the Mediterranean, this does not make us the centre of the world.
We do not offer a large internal market, nor cheap labour – factors that in themselves attract numerous investment opportunities.
We do, however, offer an advantageous tax structure, that coupled with the country’s other competent resources, would present an interesting proposition for investors.
Could it be that we are over-engineering a simple process?
Rather than utilising our limited human and financial resources to identify and target specific opportunities, we are trying to be everything to everyone.
I will not go into which government attracted who and what, but I trust we can all agree that having a continuous and successful FDI policy and strategy is a must.
We need to adapt to market realities and be driven by successful strategies. The world has become a small place, so learning from what worked for others is relatively easy and less expensive.
We need to continue building on the positive reputation we have achieved so far. We need to position ourselves as a ‘safe haven’ and a tax and business friendly place with competent resources.
We need to be rid of beaurocracy as businesses are extremely concerned about the economic environment, and are exercising reasonable caution in where to place their assets and investments.
Their relationship with the Government in the country where they will operate from is of essence and this perception is built from the word go.
This is why a dedicated, targeted and focused approach is essential. What is the point of participating in a fair where the right candidates are not present, or where our presence is going to be made irrelevant by much larger competitors?
We need to carry out the necessary groundwork, understand market trends, identify niche opportunities and pinpoint lacunas.
We need to be able to foretell market trends and not wait until everyone is chasing the same golden goose.
Massive international advertising and promotional campaigns worth hundreds of thousands if not millions of euros are not always effective, and do not suit every context and purpose. Does anyone believe that we can beat the big players at the money game? I don’t.
On the other hand, I am convinced that an effective, dedicated and competent team, equipped with the necessary market intelligence and infrastructure, would suffice to propel us forward in fulfilling our goals.
We should start by answering some very basic questions: Where are we today? Where do we want to go? How do we get there? This is not simplistic, as we may be missing the wood for the trees.
Rather than travelling all over the world, trying to convince a multitude of companies to come and invest in Malta, how about identifying those territories and industries that offer the best opportunity?
We should target market our prospects by building intelligence about them so that, when we pitch, it is all relevant to them.
We could also be more pro-active. We created a conducive environment for the gaming industry. Could we not possibly identify other opportunities, legislate and then market?
We certainly need to spread our risk and cannot remain dependent on any one industry. We all know how easy it is for these companies to pack up and leave.
Rather than repeating strategies of the past, would it not be more sensible to embark on a more focused effort and chart a long term course? This or indeed any other approach to attract more quality FDIs to Malta requires supporting mechanisms, including: incentives such as tax credits based on investment and Maltese payroll costs; a simple(r) tax system; a solid and competent compliance team to vet new applicants, without any unnecessary bureaucratic procedures.
The same ‘country’ manager handling the application should also be involved on an ongoing basis to ensure continuity.
The team promoting Malta needs to be competent, lean and mean – if the product is good, it will sell.
Malta Enterprise is at the centre of the FDI effort for Malta and must continue to be so. The private business community is a vital source of wealth and jobs.
Would it not make sense to forge a closer relationship between the two, and abandon political mileage?