Investing in Malta

Attracting FDI

A Commitment to Growth

Malta is setting the benchmark for foreign investment in the Mediterranean basin through a broad range of rewarding business opportunities right across its diverse and fast-growing economy.

A record of more than 130 investment projects were approved by the country’s investment promotion agency, Malta Enterprise, in 2013, the Minister for the Economy, Investment and Small Business, Dr Christian Cardona said. This amounted to an investment of 166 million euro and 3,000 new jobs. The island’s macroeconomic stability had been instrumental in attracting capital and companies. Dr Cardona said: “There was no banking crisis here. The eurozone crisis was something we helped with, rather than suffered from. We have a growing economy with high rates of employment. We also have political stability, with consensus across the board about the need to welcome business and help it prosper.”

Dr Cardona said that Malta was strong on robust regulation but flexible too, always adapting to help businesses as they deal with current realities without burdening enterprise with heavy taxation. All of these factors had enabled Malta to develop strong online gaming, financial services and tourism sectors. “The construction sector surges ahead and other sectors, niche and not so niche markets, are doing pretty fine – everything from life sciences to our aviation park.” Despite a recent wave of investment projects, going forward, Malta was aware that its proposition had to be particularly strong if it wanted to stay on top of investors’ lists, he said. “We know that we need to compete with the best in the world. We offer the European open market of 500 million people, but we also look to Africa and the east.”

Mario De Marco, Deputy Leader for Parliamentary Affairs of Malta’s Nationalist Party, hailed Malta’s success in projecting itself as a regional centre of excellence in financial services, ICT, tourism, high value-added manufacturing, health and education. “But we must not stop here. What has made our country successful in the past two decades is that as one sector grew, we immediately asked ourselves: what next?” He stressed that industries constantly evolved and that new investment would come from innovation-driven sectors such as digital gaming, as well as the creative and the green economy in addition to tourism. “Our future depends on the capacity to keep on transforming the economy towards more knowledge-intensive and innovative industries. There is no worth in continuing to subsidise inefficient industries through taxpayer money.” Dr De Marco also highlighted the need to invest in start-ups, smaller businesses and in entrepreneurship in order to develop Malta into a creativity and innovation hub.

One of Malta’s key advantages was that throughout the years both political parties supported Malta’s economic policies, Prof. Mario Vella, Chairman of Malta Enterprise, said. “Anyone following the local political scene will get the impression that we disagree on just about everything, but when you scratch below the surface, the differences are really not at all that impressive.” In contrast to other industrial nations such as Great Britain and the USA that were seeking to revitalise their manufacturing bases, Prof. Vella stressed, industrial production had always played an important role in Malta. Although Malta’s industrial fabric had changed over the years, “the engineering backbone of this country has been remarkably resilient, and I think the trick has been that the state has been less of a burden but more a facilitator,” the Chairman said.

What Investors Really Want

When the Maltese government had decided to privatise its lottery business in the early 2000s, it was a first globally. Intralot, today a global gaming giant, was quick to seize this opportunity and never looked back, according to Ioannis Katakis, the CEO of Maltco Lotteries, Intralot’s subsidiary in Malta. He said Malta should be on the radar of foreign investors due to its efficient business environment, explaining that his company started operating within four months of winning the international tender. The financial sector offered financial facilities and funding very quickly while support services could easily be sourced, Mr Katakis said, adding that these were the conditions that investors look for when venturing into new markets. Mr Katakis also emphasised the good quality of Malta’s past and present IT and telecoms infrastructure while highlighting that “Malta is one of the best countries in terms of a stable taxation regime. Countries who change their taxation system actually damage foreign investment.”

A New Future as Management Hub

The future of manufacturing would completely reinvent paradigms for cost and profitability, according to Joseph Khoury of Methode Electronics. “Products and processes will become even more complex, and clients will continue expecting costs to be squeezed out,” the Vice-president and General Manager of Methode’s European Automotive Division said. With technology advances, Khoury stated, less people would be required to operate production lines. “This means that the manufacturing wage differential between Malta and higher-cost countries will become less of an advantage. Tax credits and low rents were important, but these could easily be offset by higher logistics, energy, communication, travel and bureaucracy-related costs,” Khoury said. While this seemed to be an economic threat at first sight, Khoury stressed that it was also an opportunity for Malta to establish itself as a management and support centre – as a high-end manufacturing base that was able to bring new products and services to the market. Firms should not be shy to locate mature production lines to lower cost countries, Khoury said, but build capabilities in managing innovation, processes and new technologies in countries like Malta.

A New Future as Management Hub

The future of manufacturing would completely reinvent paradigms for cost and profitability, according to Joseph Khoury of Methode Electronics. “Products and processes will become even more complex, and clients will continue expecting costs to be squeezed out,” the Vice-president and General Manager of Methode’s European Automotive Division said. With technology advances, Khoury stated, less people would be required to operate production lines. “This means that the manufacturing wage differential between Malta and higher-cost countries will become less of an advantage. Tax credits and low rents were important, but these could easily be offset by higher logistics, energy, communication, travel and bureaucracy-related costs,” Khoury said. While this seemed to be an economic threat at first sight, Khoury stressed that it was also an opportunity for Malta to establish itself as a management and support centre – as a high-end manufacturing base that was able to bring new products and services to the market. Firms should not be shy to locate mature production lines to lower cost countries, Khoury said, but build capabilities in managing innovation, processes and new technologies in countries like Malta.