Malta remains an attractive destination for foreign direct investment (FDI). This is the view shared by a majority of the respondents to EY’s 2013 Malta Attractiveness Survey which gauges the perceptions of the Malta’s business climate and its attractiveness for FDI. Survey respondents are senior executives from a large cross section of foreign investors already operating in Malta.
The highlights: 88 per cent consider Malta to be attractive for FDI and 63 per cent believe that it will remain so in the next three years, 93 per cent have confidence in our ability to overcome the global economic crisis and 53 per cent are planning to expand their operations here. Echoes of the assessments of ratings agencies were loud and clear.
Yet it would be unwise to be complacent. Since our first survey nine years ago the number of respondents with expansion plans or planning to be in Malta has been steadily decreasing. Granted, this has taken place with the eurozone crisis as a dark backdrop when a good proportion of the companies surveyed have a big dependence on export activities. Yet EY’s European attractiveness survey indicates that last year our continent still received in 22.4 per cent of global FDI flows.
We also asked respondents to rate Malta’s FDI attractiveness according to a number of criteria. The three highest scoring were stability of social climate (89%), stability and transparency of political, legal and regulatory environment (86%) and corporate taxation (84%). Clearly, the climate for doing business in Malta is still seen as favourable - a possible consequence of our nimbleness, accessibility and positive approach to foreign investment.
Our respondents also identified the sectors and business functions which they think will drive future FDI inflow. Interestingly, their views parallel those of government, with financial services, ICT, business-to-business services, pharmaceuticals and biotechnologies and creative industries leading the way.
The conference unveiling our results was held in partnership with the Malta Chamber of Commerce, Enterprise and Industry together with the support of Finance Malta, Malta Enterprise and the Lotteries and Gaming Authority.
Very well-attended, participants came from all streams of the private and public sectors and contributed actively with analyses and recommendations, particularly in the breakout sessions.
The financial services group, for instance, emphasised the need for continuous innovation and called for one body (possibly an existing one) to ensure that Malta was the first to seize new opportunities on the international horizon. Another recommendation was to attract talent which was not immediately available here and to provide (possibly through EU funding) extended and meaningful work placements for Malta-trained students as a way of improving their employability and career prospects. Finally, the need to make Malta more visible, both within and beyond Europe, was mentioned in various contexts.
The level of conference discussion was also enhanced with interventions by ministers Edward Scicluna and Evarist Bartolo and shadow minister Mario Demarco. A scintillating keynote speech was given by Jan Peter Balkenende, the former Dutch Prime Minister and a current EY partner. Proceedings came to an end with a vibrant panel session including Juanito Camilleri, Malta University Rector, David Curmi, president of the Malta Chamber of Commerce, Mark Watkinson, CEO HSBC Malta, Matthias Fauser, CEO PlayMobil and Alfredo Munoz, CEO MiddleSea Insurance.
The session recommended more and deeper linkages between the university and industry and the need to further exploit Malta’s warehousing and logistics potential.
The Singapore model was brought into the equation. More broadly, panellists agreed on the need for a clearly articulated and far sighted vision for Malta.
So where do we go from here? With a small but open economy, Malta’s ability to continue to attract FDI will contribute in no small part to the country’s future success. But we cannot rest on our laurels – growth needs to be sustained and investment increased in certain areas. Taking a bird’s eye view, over 53 per cent of our respondents indicated that Europe is amongst their target markets, a trend which we believe reflects the resurgence in confidence in the rest of Europe.
As in 2012, transport and logistics infrastructure as well as telecommunications infrastructure were areas marked for improvement.
The Government’s commitment to reduce bureaucracy and utility rates was reflected in our respondents’ view that making headway in these directions would help improve Malta’s competitiveness.
Many investors also outlined the need for government agencies to increase awareness and marketing efforts. We believe that more support to education, more vocational training and work/placement opportunities, both locally and abroad, would have a positive impact on our ability to help existing foreign investors, encourage them to expand and to attract new ones.
Together we can build a better working world. A better Malta.
Ronald Attard is the country managing partner at EY Malta.