In­vestors’ trust in po­lit­i­cal sta­bil­ity drops 15% but Malta re­mains at­trac­tive

Malta Independent - - FRONT PAGE - He­lena Grech

They an­nual EY at­trac­tive­ness sur­vey has found that an over­whelm­ing ma­jor­ity of for­eign di­rect in­vestors view Malta favourably (87 per cent), notwith­stand­ing a col­lec­tive drop of con­fi­dence in the sta­bil­ity and trans­parency of the po­lit­i­cal, le­gal and reg­u­la­tory en­vi­ron­ment. This is the high­est score reg­is­tered since 2011.

EY Malta con­ducts an an­nual ‘at­trac­tive­ness’ sur­vey as part of an on­go­ing global EY ini­tia­tive, “which gath­ers the views of for­eign di­rect in­vestors in var­i­ous coun­tries and re­gions.” The sur­vey was led by Si­mon Lee Bar­beri, se­nior man­ager of EU ad­vi­sory and the Malta At­trac­tive­ness Sur­vey and was pre­sented yes­ter­day.

It must be noted that the sur­vey was con­ducted prior to the Brexit ref­er­en­dum – there­fore sig­nif­i­cant changes could pos­si­bly be reg­is­tered dur­ing next year’s EY sur­vey. At­trac­tive­ness refers to a num­ber of fac­tors which would at­tract for­eign in­vestors to set up shop in a par­tic­u­lar coun­try.

In the case of Malta, 91 per cent of the for­eign di­rect in­vestors sur­veyed found cor­po­rate tax­a­tion favourable and 88 per cent found the sta­bil­ity of so­cial cli­mate to be at­trac­tive.

A pro­por­tion of 70 per cent found the sta­bil­ity and trans­parency of po­lit­i­cal, le­gal and

reg­u­la­tory en­vi­ron­ment to be amongst the most at­trac­tive fea­tures – down 15 per­cent­age points from the pre­vi­ous year.

The three weak­est ar­eas in which for­eign di­rect in­vestors found that there is room for im­prove­ment are do­mes­tic or re­gional mar­ket – reg­is­ter­ing only 39 per cent ap­proval (an in­crease of a sig­nif­i­cant 18 per cent from the pre­vi­ous year), R&D and in­no­va­tion en­vi­ron­ment at 31 per cent – an in­crease of 10 per cent over the pre­vi­ous year and lastly just 29 per cent found trans­port and lo­gis­tics in­fra­struc­ture to be favourable – down 3 per cent from the pre­vi­ous year.

Cur­rently, just over half of the for­eign di­rect in­vestors sur­veyed be­lieve they will ex­pand op­er­a­tions in Malta in a year’s time.

A slightly higher pro­por­tion – at 58 per cent – be­lieve that Malta will re­main at­trac­tive in three years’ time. An up­com­ing gen­eral elec­tion as well as un­favourable eco­nomic con­di­tions within the EU could con­trib­ute to this.

A size­able 79 per cent of those sur­veyed be­lieve that they will be present in Malta in ten years’ time – con­tribut­ing to­wards a sta­ble and se­cure econ­omy.

Cru­cial to Malta’s at­trac­tive­ness, 71 per cent of re­spon­dents be­lieve that Malta is keep­ing pace with reg­u­la­tory changes in com­pet­ing ju­ris­dic­tions, with 11 per cent be­liev­ing that this is not the case.

A re­cur­ring is­sue for the Mal­tese labour mar­ket, what this govern­ment has called ‘the skills gap’ con­tin­ues to per­sist, with 55 per cent of re­spon­dents say­ing that they are un­able to find and re­cruit the re­quired spe­cialised skills in the lo­cal labour mar­ket.

“Malta’s per­ceived FDI at­trac­tive­ness has in­creased for the sec­ond year run­ning with 87% of the 2016 sur­vey re­spon­dents be­liev­ing Malta is an at­trac­tive in­vest­ment des­ti­na­tion. Sec­toral dif­fer­ences con­tinue to be ob­served.

“As in pre­vi­ous years, the man­u­fac­tur­ing in­dus­try con­tin­ues to show the low­est scores in the at­trac­tive­ness stakes, although there has been a mar­ginal im­prove­ment in sec­toral per­cep­tions since last year’s sur­vey.”

Asked about what pol­icy ac­tions in­vestors be­lieve will ad­dress the cur­rent and fu­ture skills short­ages, re­spon­dents chose: In­tro­duc­ing skill sets for the “new” econ­omy in schools (cod­ing, pro­gram­ming), de­vel­op­ing na­tional frame­works to en­cour­age in­ter­na­tional in­tern­ships or work place­ments for Mal­tese na­tion­als, widen op­por­tu­ni­ties for rel­e­vant work place­ments as part of higher ed­u­ca­tion syl­labi, the in­tro­duc­tion of a skills gap mon­i­tor­ing board and tar­get­ing in­ter­na­tional mar­ket­ing cam­paigns high­light­ing Malta as a great place to work.

“Malta’s ac­cess to the EU mar­ket, the rel­a­tive sta­bil­ity of its po­lit­i­cal and eco­nomic en­vi­ron­ment, its skilled, English-speak­ing labour force and its at­trac­tive fiscal regime are key fea­tures that con­tinue to be high­lighted by many re­spon­dents,” Mr Bar­beri said.

The top five fo­cus ar­eas iden­ti­fied for Malta to re­main glob­ally com­pet­i­tive are that of de­vel­op­ing ed­u­ca­tion and skills (79 per cent of re­spon­dents), sup­port­ing high-tech in­dus­tries and in­no­va­tion (71 per cent), sup­port­ing small and medi­um­sized en­ter­prises (62 per cent) and lastly an in­crease in in­cen­tives for FDI in­vestors (60 per cent).

Un­sur­pris­ingly, the lead­ing busi­ness sec­tors in the next five years have been iden­ti­fied by in­vestors as iGam­ing (71 per cent), ICT and tele­coms (50 per cent), other fi­nan­cial ser­vices (47 per cent), as­set man­age­ment (46 per cent) and lastly fund ad­min­is­tra­tion (46 per cent).

Ac­cord­ing to Na­tional Statis­tics Of­fice data for 2015, the iGam­ing sec­tor ac­counted for a to­tal of 8 per cent of gross value added.

A to­tal of 111 cur­rent FDI com­pa­nies or in­vestors re­sponded to EY’s e-sur­vey, con­ducted be­tween April and May (be­fore the Brexit ref­er­en­dum).

The re­spon­dents’ co­hort pro­file was very sim­i­lar to last years’ sur­vey – re­flect­ing a range of sec­tors and sizes.

Launch­ing the an­nual con­fer­ence, Mr At­tard, EY Coun­try Manag­ing Part­ner, an­nounced the launch of a think-tank spear­headed by EY, with the core pur­pose of see­ing what ac­tion should be taken for eco­nomic growth in Malta. He be­lieves that the re­search should be grounded in solid re­search.

“We wel­come the Cham­ber of Com­merce on this, po­lit­i­cal par­ties, aca­demics and all rel­e­vant stake­hold­ers to pro­vide in­put,” said Mr At­tard.

Photo: Michael Calleja

The English broad­caster, jour­nal­ist and au­thor Jeremy Pax­man was one of the prin­ci­pal speak­ers at the EY con­fer­ence that took place yes­ter­day.

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