State of Innovation

In spite of its small size, Malta has become a hotbed for manufacturing multinationals, global finance firms, Pharma producers, IT and software developers, games studios, and blockchain start-ups, which have set up operations on the Mediterranean island. Their growth and success has helped Malta emerge as one of Europe’s best performing economies according to the International Monetary Fund. Malta has long recognised that traditional investment incentives are no longer enough to attract foreign companies to its shores. The country’s decision  to focus on sector-specific regulations, infrastructure, talent and technologies is paying off and driving investment into Malta.

“Toly has been operating in  Malta for nearly 50 years. Today, we supply 22 out of  the top  30 beauty companies in  the world.”

Andy Gatesy, Chairman & CEO of Toly Group

More than Manufacturing

When gaining independence from the UK, Malta had little choice but to attract foreign businesses to offset the fact that it had few natural resources. Initially, Malta sold itself as a cost-competitive manufacturing base for foreign firms. German toy manufacturer Playmobil and French-Italian electronics manufacturer ST Microelectronics were among the first to arrive in the 1970s and 1980s. Other long-time investors include the engineering group Trelleborg and packaging specialists Toly. Many of Malta’s first arrivals are still operating on the island, and while new  sectors have emerged, existing industries have reengineered their activities to maintain and enhance their competitive edge. Malta has significantly diversified its economic base since it joined the EU in 2004, and the island has seen strong investor interest in areas such as financial  services, iGaming, digital  games, ICT, aviation, maritime, and life sciences.

“Lufthansa Technik was  the first  foreign pioneer in  the aviation sector in Malta. This  year, we  are celebrating  our 15th anniversary and with that constant development, growth and success.”

Marcus Motschenbacher, CEO of Lufthansa Technik Malta

Big  Name  Investors  

International banks such as HSBC and trade finance specialist FIMBank, as well as insurance companies like Munich Re, Aon and Marsh have set up operations in the country. Fund administrators Amicorp, Citco and Custom House are also present on the island, as well as a selection of Fortune 100 companies that have structured financial operations in the country. Malta’s IT sector has probably attracted the largest number of companies.

In addition to software developers, many iGaming companies have chosen Malta because it was the first EU country to regulate this industry. Aircraft maintenance took off when Lufthansa Technik and SR Technics established operations in the country.  Currency printing  company  De La Rue has been on the island since the 60s, while Crane Currency is a more recent addition to Malta’s FDI community. The island is also increasingly on decision makers’ shortlists when it comes to choosing the location of their international and regional headquarters.

Konica Minolta and HeidelbergCement are just some of the corporations that have located corporate management functions on the island. They are now being joined by companies from the fast-growing Distributed Ledger Technology  (DLT) sector, including Binance, OKEx, DQR,  Neufund and Chilliz.

Secret to Success

In many areas, the key to Malta’s success is regulation. The island has been continuously pushing the regulatory boundaries in an effort to provide a stable and predictable environment for companies to operate in. Practitioners in  Malta’s finance centre point to the link between the strong performance of the  sector and the island’s carefully crafted and continuously developed regulatory frameworks  for many specialist activities. Concurrently, business-friendly legislation has breathed new life into Malta’s aircraft management industry. The island is also the birthplace of regulated online gaming and, more recently,  Malta has received a lot of positive attention for its decision to regulate DLTs.

Pharma companies initially came to the island to take advantage of a legal framework for the production of generic drugs. Today, Malta is keen to become  the next powerhouse in the medical cannabis industry after coming up with a  framework that allows for the manufacture of cannabis-based pharma products. The idea is not just to attract the manufacturers but also their clinical  and  laboratory research arms. Global leaders in this field are already looking at establishing facilities on the island.

“We wanted to tap into the vast and talented resource pool of the EU, and Malta was the perfect place for this. The Malta office now employs highly skilled people from 10 different countries.”

Dean Sharpe, CEO of 4AGames

Talent & More

To guarantee a pipeline of talent for established and new companies moving to Malta, the country is investing heavily in its workforce. The engineering skills of the Maltese are the backbone of Malta’s manufacturing firms, offering a vital source of innovation and competitiveness. The aviation sector has benefited tremendously from the introduction of courses for aviation technicians, which were designed in response to industry needs. Malta is also throwing its doors wide open to foreign professionals, who, in sectors such as finance and gaming, can benefit from a 15% income tax rate, as well as a fast-track service for work permits of third-country nationals. The underlying strengths of Malta are its location and the ease of access that it offers into surrounding markets. Malta’s EU membership provides companies with access to the Union’s massive internal market of over 500 million people, but the island’s connections go far beyond that, and Malta is an ideal jumping-off point for accessing the growing markets of the region. Malta’s approach also places a strong emphasis on the creation of sector-specific infrastructure. The government has built a cluster development dedicated to the aerospace industry, including hangars and ancillary facilities, as well as a Life Sciences Park that fosters the growth of biotech companies.

“Crane Currency provides the paper for US currency and banknotes to central banks worldwide. We have built in Malta the most modern banknote printing operation. The facility is twice the size of the Malta football stadium and will be the company’s centre of  banknote printing.”

John Scott, Director of Operations of Crane Currency

The Next Generation  

The  country is  now setting  the  conditions for  the next generation  of FDI. Manufacturing is moving into Industry 4.0, and companies comment favourable on Malta’s ICT infrastructure and connectivity.

Research and development, robotics, blockchain technologies and  Internet of Things (IoT) solutions are equally gaining in importance  in Malta’s economic mix and are attracting companies from Europe,  Asia and  beyond. The digital entertainment industry is poised to become one of Malta’s next success stories, with the island attracting studios and digital artists from around the world. There is also the expectation that Malta will become a leader in the medical cannabis field due to the lack of regulations in other European countries. It is one of Malta’s priorities to build further the niches it started in recent years. In the aerospace sector, this means that Malta is positioning itself as an on-the-ball-player in the field of drone testing and the development of commercial applications.

“Trelleborg in Malta was set up in 1961 and is one of the oldest examples of foreign direct investment in Malta. From this tiny island, it supplies 1 billion safety critical seals per year globally to major automotive and  industrial players.”

Martin Hignett, Managing Director of Trelleborg Malta

Innovation Driven

Malta’s government has committed  itself  to making Malta the hub of choice for a wide range of sectors and to make doing business  in Malta as easy and efficient  as possible. Leading the way in attracting new companies, as well as supporting companies operating in the country, is Malta Enterprise.

The agency is armed with an attractive package of incentives, including soft loans, investment allowances, training grants, tax incentives and the provision of ready built specialised factory space. While smoothing the path for new companies and getting new investors off the ground, Malta Enterprise is no longer focused on just attracting multinational corporations to invest and set up base on the island. The organisation is also playing a greater role in supporting companies’ adoption of automation, nurturing digital capabilities and up-skilling of the workforce.

“This summer De La Rue celebrated the production of the 50,000,000^th passport at its site in Malta. The first ever purpose built ePassport production facility opened its doors in Malta in 2008 and since then De La Rue has seen productivity grow year on year.”

Edward Chetcuti, General Manager Operations of De La Rue

Into the Future

The long-term goal is to reinforce and widen Malta’s economic mix by developing an international standing, not only as a production base, but also as a test-bed for innovation. To achieve this, the government is encouraging research, development and innovation activities, while ensuring that the right skills are in place to keep up with the breakneck pace of change in the development of global manufacturing processes and technologies.

By marrying a still relatively inexpensive and business-friendly environment with close proximity to major European and North  African markets and a skilled workforce, Malta is luring foreign companies with a unique set of advantages.