Malta’s attractiveness as a destination for investment has taken a massive knock, with its ranking for stability and transparency falling dramatically over the past year, and its overall score dropping nine percentage points.

The annual EY Attractiveness Survey, which analyses the island’s advantages and forecasts future trends, saw the attractiveness of its political, legal and regulatory environment fall from 85 per cent in 2015, to 70 per cent in 2016, and just 58 per cent in 2017.

This criterion was ranked seventh most important in 2017, while in 2016, it was in third place. Corporate taxation was the most important factor for the second year in a row.

The survey, carried out among foreign direct investors from a wide range of sectors between March and May this year, also revealed that the overall attractiveness score was 78 per cent in 2017, down from 87 per cent a year earlier.

The difference of nine percentage points was evenly split between those who said it was not an attractive place for FDI (from 6 per cent in 2016 to 11 per cent) and those who said they did not know (from 7 per cent to 11 per cent).

Asked whether it would still be attractive in three years’ time, 54 per cent said ‘yes’, down from 58 per cent a year ago.

For a few years, the shortage of qualified staff has been highlighted in the results, and this one was no different, with three out of every four respondents saying that the country should concentrate on education and skills if it wanted to remain attractive in a global scenario. Eighteen per cent said that they were not managing to retain specialised personnel, with only 38 per cent filling these gaps with locals.

Only half the respondents felt that the current regulatory and legislative framework in Malta gave them an advantage while a third said they gave no advantage

In second place was support for high-tech industries (64 per cent), and in third, investment in major infrastructure and urban projects (63 per cent).

Only half the respondents felt that the current regulatory and legislative framework in Malta gave them an advantage while a third said they gave no advantage (both only marginally changed since 2016).

However, when asked whether Malta was keeping up with changes being made by other countries, the number saying ‘yes’ dropped from 71 per cent in 2016, to 64 per cent this year, and those saying ‘no’ went up from 11 per cent to 19 per cent.

The survey is also a good opportunity to look ahead and to cross-check investors’ expectations with policy. I-gaming remained the sector seen as the most likely one to drive Malta’s growth in the next five years, with the various sub-sectors of financial services having very different rankings, ranging from 45 per cent for ‘other’ financial services, down to 18 per cent for pensions.

Perhaps more significant was the bottom of the table, with some of the sectors mentioned as having great potential over the past few years languishing. These included logistics (14 per cent),‘other life sciences’(7 per cent) and oil and gas (3 per cent).

The depth of FDI’s roots in Malta were also looked at, with 61 per cent saying that they plan to expand over the next year – although 62 per cent said it depending on filling vacancies – and 78 per cent saying they would still be in Malta in 10 years’ time.

EY, which conducts similar surveys across the world, also asked the respondents about the risks which would have the deepest impact on their next investment in Malta: 41 per cent said that economic and political instability in the EU (excluding Brexit) was the most important risk, with the talent shortage ranked most important by 40 per cent.

Asked about the impact of Brexit, 83 per cent said it would have no effect.

A total 147 companies were surveyed, employing between them 16,000, with a turnover of €2 billion.

The results were presented at the EY conference being held today.

EY country managing partner Ronald Attard said in his introductory speech to the 600 delegates that the conference was being held “under a heavy and dark cloud”, referring to the killing of blogger Daphne Caruana Galizia.

“We had to decide whether to go ahead or call it off. But we decided to rise to national occasion and do the right thing. Cancelling this conference would be giving in to those who assassinated her. The bomb was meant to blow up our belief that we are part of the EU collective. Malta should remain the Malta we love – safe and open to all. This is our small but loud confirmation that this is so,” he said.

The theme of the conference was ‘Thinking without the box: disruption, technology and FDI’. leading him to comment: “If there were ever a time for this country to think outside the box, it is now,” he said.

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