Malta’s at­trac­tive­ness drops by 4% for in­vestors

The Malta Business Weekly - - FRONT PAGE - Ju­lian Bon­nici

In­vestors in Malta have warned against the coun­try’s com­pla­cency ac­cord­ing to the EY At­trac­tive­ness Sur­vey, with the coun­try’s per­ceived at­trac­tive­ness of the coun­try for for­eign in­vestors de­creas­ing by 4% when com­pared with 2017, skill short­ages flagged as con­cern, while the rank­ing of the sta­bil­ity and trans­parency of Malta’s po­lit­i­cal-le­gal and reg­u­la­tory en­vi­ron­ment dropped to 44%, down from 58% in 2017.

Sur­vey re­spon­dents also noted that the tal­ent shortage (57%), eco­nomic and po­lit­i­cal in­sta­bil­ity in the EU (26%), com­pe­ti­tion from emerg­ing mar­kets (22%) and the rise in pop­ulist and pro­tec­tion­ist feel­ings (22%) will neg­a­tively im­pact their fu­ture in­vest­ment de­ci­sions.

The ed­u­ca­tion sec­tor was also high­lighted as a key area of fo­cus in or­der to bet­ter de­vel­op­ing the skills of the work­force; while sup­port for in­no­va­tion to high-tech in­dus­tries (61%) and SMEs (59%) was also flagged as sec­tors which would al­low Malta to re­main glob­ally com­pet­i­tive.

It should be noted that 78% of re­spon­dents did say that they be­lieve they will still be op­er­at­ing in Malta in 10 years’ time, with only 4% of in­vestors do not be­lieve they will be present on the is­land. In ad­di­tion, around 65% of in­vestors have plans to ex­pand in the com­ing year, up from 4% and 12% when com­pared with 2017 and 2016 re­spec­tively.

The type of ex­pan­sion com­pa­nies are con­sid­er­ing varies from head­of­fice op­er­a­tions to R&D, sales and mar­ket­ing and man­u­fac­tur­ing ac­tiv­i­ties amongst oth­ers. Forty per cent of re­spon­dents high­lighted that skill short­ages may ham­per planned ex­pan­sion ac­tiv­ity.

The sur­vey found that roughly 74% of all cur­rent for­eign in­vestors be­lieve that Malta is an at­trac­tive des­ti­na­tion for for­eign in­vest­ment, a pref­er­ence the sur­vey says is pri­mar­ily driven by cor­po­rate tax­a­tion (88%), sta­bil­ity of so­cial cli­mate (75%) and the po­ten­tial pro­duc­tiv­ity in­crease of one’s firm (67%).

Malta’s ac­cess to the EU, a pro-busi­ness cul­ture, a skilled English speak­ing work­force, and lower op­er­at­ing costs were also flagged as key ben­e­fits.

Labour and skill short­ages flagged by in­vestors

As pre­vi­ously flagged by em­ployer’s unions and as­so­ci­a­tions, the sup­ply of work­force is strug­gling to keep up with de­mand, with 64% of in­vestors find­ing it dif­fi­cult to re­cruit per­son­nel, with the sur­vey also find­ing that main sec­tors en­coun­ter­ing skill short­ages are ICT and telecom­mu­ni­ca­tions (100%), other fi­nan­cial ser­vices (71%) and in­surance (70%).

How­ever, in­vestors’ abil­ity to re­tain spe­cialised per­son­nel re­mains rel­a­tively high, with 81% of re­spon­dents still man­ag­ing to re­tain their spe­cialised per­son­nel, com­pa­ra­ble to previous years. Ar­guably, a high level of em­ployee loy­alty also ap­pears to con­tinue to ex­ist.

Malta keep­ing up the pace with reg­u­la­tory de­vel­op­ments

With re­gards to Malta’s role in con­tin­u­ing to en­sure ef­fec­tive and ef­fi­cient leg­is­la­tion, the sur­vey found that in­vestors in­creas­ingly be­lieve that Malta is keep­ing pace with reg­u­la­tory changes in com­pet­ing ju­ris­dic­tions (83%), up from 19% when com­pared with the previous year, adding that re­cent de­vel­op­ments in ar­eas such as blockchain and DLT would be key.

55% of re­spon­dents also said that they be­lieve that the Mal­tese leg­isla­tive frame­work cre­ates a com­pet­i­tive ad­van­tage in Euro­pean and global mar­kets.

In­vest­ment in dig­i­tal tech­nolo­gies and work­force skills key in dig­i­tal age

While the world and Malta con­tinue with their dig­i­tal transformation, the sur­vey found that in­vestors be­lieved that around two-thirds of their staff have the right skills to keep up with these changes. To im­prove this, in­vestors have sug­gested that pol­i­cy­mak­ers in­vest in dig­i­tal tech­nolo­gies and in­fra­struc­ture (70%) as well as en­hance work­force skills for the dig­i­tal age (63%).

The tech­nolo­gies ex­pected to have the largest im­pact on re­spon­dents’ busi­nesses in­clude process au­to­ma­tion (57%), com­put­ing ad­vance­ments (55%), busi­ness model in­no­va­tion (28%) and the In­ter­net of Things (27%).

This year’s sur­vey also pro­vides in­sight into how for­eign in­vestors in Malta are far- ing with re­gards to tech­no­log­i­cal up­take. From the list of in­no­va­tive tech­nolo­gies taken on board, cloud com­put­ing (55%) is the most wide­spread, fol­lowed by data an­a­lyt­ics (27%) and mo­bile (24%). Blockchain and dis­trib­uted ledger tech­nol­ogy is al­ready in place for 5% of in­vestors. How­ever, the num­ber of re­spon­dents ex­pect­ing to have this tech­nol­ogy in place over the next three years is ex­pected to in­crease by 400%.

In­vestors mostly un­af­fected by Brexit

Re­spon­dents were also asked for their feed­back on Brexit and the im­pli­ca­tions it could have on their busi­nesses. Since the ref­er­en­dum re­sult, 77% of re­spon­dents have wit­nessed no change in their busi­ness. Com­pa­nies in in­surance, other fi­nan­cial ser­vices, and ICT and telecom­mu­ni­ca­tions once again saw more im­prove­ments, while bank­ing, man­u­fac­tur­ing, and iGam­ing were mostly un­af­fected.

Photo: Rene Rossig­naud/EY

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