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