Malta should be in­vest­ing in ed­u­ca­tion, tech­nol­ogy and in­fra­struc­ture to re­tain its edge

Malta Independent - - FRONT PAGE -

Eighty-seven per cent of for­eign di­rec­tor in­vestors sur­veyed by EY find Malta at­trac­tive and this per­cent­age con­tin­ues to rise, with fac­tors such as cor­po­rate tax­a­tion, Malta’s sta­bil­ity and the trans­parency of the po­lit­i­cal, legal and reg­u­la­tory en­vi­ron­ment and, lastly, Malta’s so­cial cli­mate con­tin­u­ing to reign as top pulling fac­tors. The three ar­eas in which for­eign di­rect in­vestors found there was room for im­prove­ment are the do­mes­tic or re­gional mar­ket, the re­search and de­vel­op­ment and in­no­va­tion en­vi­ron­ment and trans­port, lo­gis­tics and in­fra­struc­ture.

He­lena Grech sat down with EY Malta’s man­ag­ing part­ner RON­ALD ATTARD to dis­cuss the re­sults of the sur­vey and what Malta can do to re­tain its competitive edge.

What does Malta need to strate­gi­cally work on in or­der to main­tain its at­trac­tive po­si­tion?

The over­all mes­sage is pos­i­tive but we al­ways try to look at what can be done bet­ter. I would say that if you look at our sur­vey there are two key mes­sages, be­cause there are some things you can­not do much about – for ex­am­ple, the do­mes­tic mar­ket is what it is. But I think the key mes­sage is peo­ple. Our peo­ple have his­tor­i­cally been a strong point but this is no longer the case. More business is com­ing to the is­land but new busi­nesses are hav­ing dif­fi­culty find­ing the right level of hu­man re­sources: there is a skills gap. This is particularly true in re­spect of the more spe­cialised in­dus­tries that are com­ing here. The sec­ond thing is the in­fra­struc­ture: it’s been a weak point ev­ery time we have car­ried out these sur­veys. Malta is a nice coun­try to live in, a nice coun­try to do business in, and his­tor­i­cally our peo­ple have been a strong point which is no longer the case”.

Are you more con­cerned about ex­ter­nal or in­ter­nal fac­tors hav­ing an im­pact on Malta’s the at­trac­tive­ness to for­eign in­vestors?

We are try­ing to in­stil a sense of ur­gency. We are do­ing well but in this changing world you al­ways need to keep abreast with what is hap­pen­ing out there. I would be con­cerned with both fac­tors. In­ter­nal devel­op­ments are prob­a­bly more in our con­trol. If there is a chal­lenge in cer­tain fac­tors when it comes to find­ing peo­ple, this is some­thing we can coun­ter­act by say­ing that you are not tak­ing jobs off any­one: peo­ple from EU coun­tries can come in any­way, so bring­ing in peo­ple from out­side the EU is more in your con­trol. Some as­pects – such as in­fra­struc­ture – take more time to tackle but, again, this is more within your con­trol.

Ex­ter­nally you have to be ex­tremely care­ful. The world is changing and some coun­tries are changing very quickly in cer­tain di­rec­tions. Malta needs to keep abreast of what is hap­pen­ing; we need to re­ally pro­mote our strong points, make our­selves more vis­i­ble and make our­selves aware of global chal­lenges so that we can re­spond quickly.

Is there a con­cern that Brexit, and the UK’s new­found free­dom away from the EU, could at­tract for­eign in­vest­ment away from Malta?

I would not be too wor­ried. My main con­cern is that, al­though we are Mediter­ranean, we are An­gloSaxon in our way of think­ing, so hav­ing the UK within the EU was good for us and their leav­ing is a big loss. We are a coun­try of 400,000 peo­ple so there is a limit to

might not be the first op­tion – un­less it is a highly spe­cialised op­er­a­tion. If you look at the tech­nol­ogy in­dus­try, how­ever, size seems to be less im­por­tant on the ground, but you do need to act faster.

The three ar­eas are tech­nol­ogy, ed­u­ca­tion and in­fra­struc­ture. It will take time, but we need to adapt our ed­u­ca­tion sys­tem to meet the new op­por­tu­ni­ties that are now avail­able and as far as the in­fra­struc­ture is con­cerned, you’re not go­ing to snap your fin­gers and change things. past three years. When we rated the fac­tors, there was a de­cline in this area.

Well, his­tor­i­cally this was the case, and what I want to em­pha­sise is that it is still a strong fac­tor. The rat­ing is still high but I think we should keep it close to 100 per cent. We pride our­selves on con­sen­sus – even when we mar­ket our­selves to for­eign in­vestors, we say that con­sen­sus is a strong point. That went down by 15 per­cent­age points in one year, which is not a lit­tle and we want to see this come back up im­me­di­ately. One thing we can con­trib­ute to, even go­ing back to these think­tanks, is that if we fos­ter pos­i­tive ideas which ev­ery­one agrees to, I think it would be a move to­wards peo­ple com­ing to work to­gether for a bet­ter Malta.

the gov­ern­ment needed to “do bet­ter” and that the Op­po­si­tion can­not con­tinue slan­der­ing Malta in the in­ter­na­tional arena. Does EY want both the gov­ern­ment and the Op­po­si­tion to clean up their acts?

For a suc­cess­ful coun­try, I think it is im­por­tant that ev­ery­one is clear on the strong points of the coun­try. It’s im­por­tant – and one of the rea­sons why we ask peo­ple to rate this fac­tor – how peo­ple sta­bil­ity is per­ceived. To put ev­ery­thing into con­text, Malta’s score is still very high. Peo­ple like in­vest­ing in a sta­ble, safe econ­omy. We are used to scor­ing 85-95 per cent, and al­though it has fallen, it is still high. This is one thing I want to em­pha­sise.

Tax­a­tion came across as a very pos­i­tive at­tribute in the sur­vey. I think it is right to have an at­trac­tive cor­po­rate tax regime. We al­ways need to look at ways of en­sur­ing that busi­nesses are not over-taxed and ways of at­tract­ing more business to the is­land.

How­ever, we need to go beyond tax­a­tion: it is peo­ple and the ease of do­ing business on which we should fo­cus. One fac­tor that I have not men­tioned be­fore is the ease of start­ing up a business. Are we tak­ing ad­van­tage of our size and the ease with which we can adapt? We have the dis­ad­van­tage of not be­ing large, but be­ing small also gives us ad­van­tages. We must en­sure that we have the right peo­ple on the ground: if we can­not find the right peo­ple in the EU and we are not tak­ing jobs from any­one, let’s make it eas­ier to bring peo­ple to Malta. Let’s tackle bu­reau­cracy and the lack of digi­ti­sa­tion.

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