When the speeches given at the EY conference on foreign investment are stripped of all the rhetoric, bare facts expose some worrying signs. Prime Minister Joseph Muscat went overboard in his drive to project Malta as a successful country and as an ideal location for foreign direct investment.
He has good reason to be pleased about Malta’s economic performance and thinks that the country can do even better, a view that is shared by many others.
However, some of the results of the EY survey show Malta has to be very careful not to lose the competitive edge that has enabled it to make the progress Dr Muscat is justifiably boasting about and which, it needs to be forcefully said, is also attributable to the collective efforts of past administrations and the people as a whole.Dr Muscat, as well as the Opposition leader Simon Busuttil and guest speaker Alastair Campbell all made very valid points about issues like incentives and image, but what matters most at the end of the day is the action taken to correct shortcomings or to redirect action, where needed, to achieve the best possible results.
The 79 per cent of current foreign investors who still find Malta attractive for investment is still healthy. But why has the percentage dropped? Three years ago, it stood at 91 per cent. What has gone wrong?
It has been explained that the shift resulted mainly in a movement in responses from a positive outlook to “don’t know” rather than a movement into the “not attractive”. Even so, the change cannot be said to be positive.
Even more disturbing perhaps is that the level of uncertainty grew from three per cent to nine per cent between 2012 and 2013, and from nine per cent to 15 per cent between 2013 and 2014. One encouraging finding is that 56 per cent of existing investors plan some form of expansion.
There is no harm in expressing a measure of self-satisfaction about the economy’s resilience. This can help raise national confidence even further, but at the same time there would need to be a greater sense of urgency in tackling issues that are gradually dragging Malta down in survey results.
The EY survey report warns there is no room for complacency if the country wants to ensure that the shift from positive to uncertain does not go from uncertain to negative. Even the number of those who think that Malta will remain competitive in three years’ time is down.
Particularly disturbing though are the results for the manufacturingsector. According to the survey, only eight per cent said that Malta was definitely attractive and 50 per cent said it was attractive, down from 82 per cent last year.
Nearly one in four of manufacturing respondents chose the “do not know” option and a fourth said Malta was not attractive.
Diversification into tourism, financial services, iGaming, aircraft maintenance and maritime trade have greatly helped in boosting growth, but a healthy manufacturing base will ensure a more balanced mix.
Malta lost valuable points in recent indices by the World Economic Forum and the World Bank.
What all this means is that, while acknowledging the progress being made, greater efforts are needed to ensure that the country does not lose the momentum for further progress.