The fourth investor
This annual report and the accompanying event are now in their 15th year. It’s been a decade and a half of measuring and analyzing the state of play of Malta’s FDI scene. We have monitored changes, noted spikes and troughs, and observed trends. It is greatly satisfying to see that this annual exercise has now grown so much in stature, becoming the national investment weather vane for both the private and public sectors, as well as for current and prospective investors.
From climate change to disruption at all levels, from geopolitical and economic tensions to the virtually limitless opportunities being signposted by artificial intelligence, this world — our world — is undergoing an epochal sea change. As an island, it is no longer just the waves of the Mediterranean that shape Malta’s destiny but, perhaps much more forcefully, also invisible waves and undercurrents. Today, and much more tomorrow.
This year’s survey of current foreign investors is sending a range of messages that we have analyzed in detail in another section of this report. Allow me to highlight the significant ones: three out of every four current foreign investors are saying that they wish to continue doing business from here. Clearly, Malta remains a solidly attractive destination for foreign investment. It is also encouraging that the sturdiness of our social fabric continues to be perceived so positively.
But I think that the time has come to get to grips with why the fourth investor is no longer keen to remain here. Our report throws a shining light on the matter: a recurring and increasingly worrying theme is our labor force scenario. An ever-growing majority of respondents report that they are having trouble finding enough people with the right skills. The quality and cost of our labor is no longer our big selling point.
Admittedly, given that GDP has grown by more than 60% in the last five years, this is clearly a case of the country becoming a victim of its own economic success. Yet the challenge is there — it is becoming more daunting year on year and, unless seriously addressed, it could jeopardize further investment and economic success.
If we look at the perceptions of the stability and transparency of our political, legal and regulatory environment it is clear that we need to regain lost ground. Yet another key issue to be flagged is the status of our corporate tax regime, which has been a cornerstone of the country’s attractiveness for decades. Has the time come to take a good look at this? Should we be looking at boosting the other criteria on our attractiveness scoreboard?
These are the questions that the fourth current investor, who is not sure about continuing to do business here, is asking. We, at EY, are proud to be publishing this report on its 15th anniversary precisely because it goes a long way to address them for him or her.
Ronald A. Attard
Malta Managing Partner