The Big Story of a Small Island

Malta may be tiny but it is not afraid of thinking big. Innovative pro-business and liberal social policies have positioned Malta as one of the world’s most forward-looking nations that is expected to become Europe’s fastest growing economy in 2019.

A booming economy with high GDP growth and record-low unemployment; 7,000 years of history and three UNESCO world heritage sites; an increasingly cosmopolitan country combined with a Mediterranean island lifestyle. This is Malta, a melting pot of old and new, local and global, work and play.

Uniquely Mediterranean

Let’s be clear, Malta is small. The archipelago, which comprises Malta, Gozo and Comino, could fit into London five times, but it is densely populated and home to 460,000 people. The main island, Malta, is 27 kilometres long and measures 14.5 kilometres at its widest point, which means crossing Malta rarely takes longer than one hour. The capital city Valletta is both the administrative and business centre of the country, while Sliema and St Julian’s are the most popular seaside towns.

Mediterranean in nature but with strong Arabic influences, Malta’s character is a reflection of its location at the periphery of Europe and on the doorstep of North Africa. Malta’s history has seen a succession of foreign rulers, and Malta has always been a place where many cultures meet and mix. This has helped the country to develop its own rather unique flavour. Case in point: the language. Maltese and English are the official languages, with 90% of Maltese being completely bilingual. Maltese, the only Semitic language to be written in Latin script, sounds almost as if it is a dialect of Arabic, with Italian and English words thrown in.

”We must embrace change and diversity, and we must convert Malta into a cosmopolitan society that is both proud to be Maltese and proud to welcome everyone who wants to live and work here to help raise our country up”

Joseph Muscat, Prime Minister of Malta

Colourful Malta

Malta enjoys a typical Mediterranean climate, with the average temperature ranging from 12 degrees in winter to 30 degrees in summer. Malta can be windy but clouds never last long – not even in winter, when the countryside starts to come alive after the dry summer months, and the island turns green, with orange and lemon trees adding colour and scent.

Malta has become increasingly multi-ethnic in recent years. Strong economic growth and career prospects have attracted a large expat population, with foreign nationals accounting for 12% of the population. Religion – an estimated 97% of the population are Roman Catholic – is considered an important part of Maltese culture. But despite being a predominantly Catholic country that only began allowing divorce in 2011, Malta today is home to some of the most progressive LGBTQ-related laws in the world.

An Unexpected Star

In recent years the Maltese have worked their way into the super-league of the world’s best performing economies. Malta’s growth rate has been forecast to reach 5.4% in 2018 and 5% in 2019, which, according to the European Commission’s Summer 2018 Forecast, will be the highest rate in the EU. Unemployment is at historically low levels, and Malta is going all out in making itself attractive to foreign workers to fill the positions that become available. Measures include flat income tax rates and fast-track visa services for certain overseas professionals.

At first glance, Malta’s rise to the top might seem surprising given that the country possesses no special advantages and only gained independence from Britain in 1964. Many in Malta and abroad credit the decision to join the EU in 2004, and the Eurozone in 2008, with boosting the country’s economy. Joining the European club has made Malta far bigger than it has ever been before and bolstered its status of a key business hub in the Euro-Mediterranean region.

While business-friendly policies helped Malta win investment from international companies, its diversified economy that pursued innovation and tapped into new ideas proved to be more resilient than those of much larger countries.

”Malta is becoming a solid top performer in economic terms, and the outlook is bright. In 2017, our GDP grew by record 6.6%, one of the highest in Europe.”

Edward Scicluna, Minister for Finance

Exportable Service Industries

Famous for its 300 days of sunshine, Malta has become a top tourism destination. In 2017, the island welcomed a record of over two million tourists, and tourism today accounts for some 25% of the country’s GDP. Malta has also seen the growth of exportable service industries. The island has become a centre for financial functions of multinationals and mid-scale firms. In recent years, the finance sector has grown by 18 to 20% annually and today accounts for 11% of the country’s GDP. The maritime industry is one of the oldest, and today Malta is home to the largest ship register in Europe and is one of the major logistics providers in the Mediterranean.

The country has also registered strong success within the iGaming industry. iGaming accounts for 10% of the Maltese economy, and the presence of some 250 plus iGaming companies is attracting platform providers, game developers, payment services, support firms and start-ups, who are flocking to the island in droves to join Malta’s thriving iGaming ecosystem. There are also opportunities in education, health, energy, aviation, life sciences and pharmaceuticals. A new industry that is expected to add to GDP growth and create jobs is the production of medical cannabis, while the island has a head start on what many believe will be the next great economic opportunity: Distributed Ledger Technologies.

Investment attraction

Some prominent companies that have invested in Malta include HSBC and BNF in banking; French line CMA-CGM in the port sector; Microsoft, Huawei and Vodafone in IT and telecoms; and Lufthansa Technik and Playmobil in manufacturing. Foreign investment has helped to push Malta’s economic performance throughout the years. Malta offers investors a secure and transparent environment in which to start or expand a business. The country has introduced business-friendly policies underpinned by a legal and regulatory framework that is fully harmonised with EU legislation. Malta has also built up modern telecommunications and international transport links, while a full package of incentives that range from fiscal benefits to the provision of custom- built production facilities are available to investors.

A fast-track service for visas and work permits, as well as a flat tax rate of 15% for highly qualified foreign professionals, have been introduced to attract the best and the brightest to work in Malta.Think Big Confidence

Strong economic growth has transformed Malta into a confident nation, which is now seeking to strengthen its position on the global stage. In view of Brexit, Malta says it could become the UK’s gateway to the European Union. Although Malta is not pitching as aggressively as other nations for UK business, it is quietly positioning itself as an attractive alternative for companies seeking an address in the European Union.

Concurrently though, Malta has to defend its economic model given the increased focus on tax competition in Europe. The island stresses that its tax regime has withstood the tough scrutiny of the European Commission and that the country is supporting all EU and OECD initiatives to combat tax evasion. While Malta’s ability to maintain its tax base will define its economic future to a certain extent, taxes are also widely seen as just one factor driving commercial decisions, and the country is paying attention towards increasing the overall ease of doing business.

Moving Forward

Malta’s economic diversity strategy of recent years has paid off in spades. Analysts and international institutions all agree that the country’s investment appeal has been crucial in unlocking its full potential. Its world-class business environment, cutting-edge technology, competitive labour costs, highly educated workforce and gateway position to European and African markets helped Malta attract companies and capital from Europe, Asia and the US. Investment, across all sectors, will remain a key driver of future growth. When it comes to attracting new businesses, keeping costs in check and maintaining Malta’s competitive tax and regulatory frameworks will be important.

Malta’s unique appeal, which at times combines a big city vibe with Mediterranean charm, is also playing a role in making Malta an attractive place to work and live. The Prime Minister has set the country the lofty challenge of turning Malta from the best in Europe into the best in the world. Malta is likely to emulate the success of global business locations such as Singapore and Dubai. Mimicking other places though is not an option. Malta will need to draw on its own strengths to define and create its own 21st century identity.