The Maltese workforce's knowledge of English and the level of productivity, as well as Malta's social and political environment, the telecommunications infrastructure and the adoption of the euro have emerged as very strong factors which make the island attractive for investment, according to Ernst & Young's 2008 Malta Attractiveness Survey.
On the other hand, what makes Malta least attractive for investment are air transport costs, shipping transport links and costs, research and development availability, innovation capacity and regulations regarding planning permissions.
Malta's level of attractiveness is also strong, but to a lesser extent, in criteria such as the legislative environment, corporate taxation, quality of life, fiscal incentives and support measures from the government, human resources skills, geographical position, human resources costs, industrial premises costs, the possibility of increasing productivity and access to finance.
Seventy two executives of foreign-owned companies based in Malta participated in the survey. The survey, conducted between April and May, explored different aspects of Malta's attractiveness for these companies to retain, expand or develop their activities here.
Challenges to Malta's attractiveness start to emerge when the following issues are raised: air transport links, office premises availability and costs, human resources availability, industrial relations environment, judicial and quasi-judicial environment, quality of office premises, research and development quality, industrial relations environment, industrial premises availability, labour law flexibility regarding hiring, termination and duration of work.
Other challenges relate to telecommunications costs, environmental laws and regulations, personal tax rate of foreign human resources, administrative environment and industrial premises quality.
Although the domestic market is not a criterion which one would expect to find attractive for foreign investors, this was the case for a fifth of respondents.
Political and economic stability, especially with regard to the adoption of the euro as the national currency, are the main reasons given by the respondents for positive perceptions over the last year in relation to Malta's attractiveness.
The euro, further benefits of EU membership and the government's focus on particular priorities were some reasons mentioned for positive perceptions for the next three years.
Over the past three years, almost 80 per cent of companies developed or expanded their activities in Malta and 70 per cent are considering expanding in the future.
The availability and quality of human resources together with increases in salaries and operational costs were causes of concern to the survey participants.
Executives were asked to name the countries that compete with the Malta location. Malta's competitors are both near and afar, spanning the Far East, India and China, the Mediterranean basin, European countries and North America. Some compete on labour costs; others compete with readily-available skilled human resources. Others have a reputation and some enjoy an excellent transport infrastructure.
Asked whether Malta implements an investment attractiveness policy that is interesting to international investors, 36 per cent said "definitely yes", 47 per cent said "probably yes", four per cent said "probably not", three per cent said "not at all" and 10 per cent could not say.
The most important measures the executives would like to see the government implement relate to fiscal incentives - such as tax incentives, an improved corporate tax rate and a reduction in personal income tax; education and training - such as an improvement in technical education and a specialised university for IT; transport - such as improved shipping and air links, a reduction in air, sea and port transport costs, and better public transport and roads; and bureaucracy - such as the creation of a one-stop shop to provide an improved and faster service from government departments and agencies.
Other recommendations include the removal of the cost of living adjustment (Cola) or, at least, its application to only minimum wage earners, more flexibility in labour legislation and greater control of construction activities, oligopolies and "created monopolies".
Participants in the survey raised the issues of customer service, banking and financing, human resources and the environment as the most important areas that need to be tackled by various non-governmental stakeholders.
The companies which participated in the survey operated in the following sectors: high-technology manufacturing (20), banking (12), iGaming (nine), ICT and telecoms (six), pharmaceuticals (five), manufacture of special purpose machinery (four), engineering services (two), metal manufacturing (two), plastic and rubber manufacturing (three), other manufacturing (five), other financial services (two) and other services (two).
Thirty per cent of the companies surveyed had a turnover of more than €35 million, nine per cent had between €12 million and €35 million, 34 per cent had between €2 million and €12 million, 26 per cent had less than €2 million and one per cent could not say.
Twenty-eight per cent of the companies had more than 100 employees, 12 per cent had between 50 and 100, 32 per cent had between 10 and 50 and 28 per cent had fewer than 10. Eighty-one per cent of the companies had shareholders residing in the EU.