The Times of Malta’s daily “Half a century ago” column for September 18, 1963 under the headline “Prime Minister in USA” is clear proof that, even a full year before Malta’s independence, Malta was seeking pastures new for inward foreign direct investment from what was then – and still is today – the world’s largest economy.
The report read “The Prime Minister, Dr G. Borg Olivier, called on the Hon. Robert Wagner, mayor of New York, in the City Hall. Dr Borg Olivier was interviewed by the American Press . . .
“The Prime Minister, accompanied by members of the delegation, was entertained to a luncheon by Chase Manhattan Bank. Useful exchange of views and a discussion of ways and means of attracting American capital investment to Malta followed”.
Could that meeting have been the catalyst that started the ball rolling to establish, or further consolidate, the financial foundations of some of the icons of Maltese business today? Think, amongst others, of the reputable brands in the automobile industry, hotel franchises and soft drinks industry, among others, in addition to more recent massive success stories in the field of computers, software and media communications.
These “brand names” would not necessarily have contributed cash or injected it into the island, but, given the priceless benefit of global branding in today’s interconnected world, today’s record tourism figures could possibly be the fruit being reaped thanks to the seeds sown in the “useful exchange of views” and “discussion of ways and means of attracting American capital investment” at the Chase Manhattan luncheon half a century ago.
Fast forwarding to today, Malta’s Prime Minister Joseph Muscat, and the newly appointed Ambassador, as we have all seen in the media photos, went straight to the top.
At their meeting with President Obama, one hopes they will have walked the talk the Prime Minister made about the need to diversify our economic over-reliance on the EU, by not only revitalising our 40-year China connection but, simultaneously, turning full circle and breathing new life into our even longer established links with the United States.
Recent statistics published by the National Statistics Office show that foreign direct investment in Malta more than doubled over the past five years, from €5.7 billion in 2008 to €12.3 billion in 2012, with just over €276 million of that coming from the US.
Over 80 per cent of this activity originated from financial and insurance activities.
It is expected that every year the average European household would gain €545
American-based businesses see Malta as an attractive destination for potential investment due to its EU and eurozone membership, the presence of excellent human resources, relatively competitive costs and highly efficient fiscal systems. One must not overlook Malta’s strategic location, which is also being used by foreign companies, including American ones, as a stable base for operations in the EU andin North Africa – particularly Tunisia and Libya.
Of particular interest to American and local investors alike is the proposed EU-US Transatlantic Trade and Investment Partnership (TTIP), which is dubbed as THE biggest trade deal in the world. This strategic partnership between the United States and the European Commission is set to be implemented by the end of 2014.
This deal is aimed at removing the trade barriers and cutting tariffs across various sectors to facilitate the buying and selling of goods between the two economies. According to official sources, “the EU and the US want to tackle barriers behind the customs border – such as differences in technical regulations, standards and approval procedures. These often cost unnecessary time and money for companies who want to sell their products on both markets. For example, when a car is approved as safe in the EU, it has to undergo a new approval procedure in the US even though the safety standards are similar.”
Therefore one can only wait and see how the scenario will develop in the coming months as barriers fall between the EU and the US, giving Malta an opportunity to widen its trade horizons in the Land of Opportunity.
Looking at TTIP in broad terms, the EU-US trade is worth €2 billion daily, so one can only imagine how this can be increased further once trade barriers are further removed. Over and above, companies will save millions of euros in charges, creating a multitude of jobs in the process in EU countries including Malta.
The EU economy, on average, would be boosted by 0.5 per cent of GDP and it is expected that every year the average European household would gain €545.
Through the efforts of AmCham Malta and their partners in Europe, the USA-Malta Double Tax Agreement, together with the prospects of having the TTIP implemented in a year or so, the prospects look very bright for Malta and incoming trade from the US.
Joseph Bonello is the managing director at Financial Planning Services Ltd.