Malta’s attractiveness drops by 4% for investors
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.