Historically Malta always presented itself as a gateway to Africa, but it was also wise enough to understand the importance of embedding itself within the European Union. A more recent strategic play by Malta has been its negotiations to attract more Chinese business to Malta. While the Chinese government may be controversial, Malta isn’t the only country courting the Chinese coin, and strong connections with both China and the EU, not to mention with northern Africa, will only help Malta to obtain the best deals in its dealings with each bloc.
One of the most fundamental pieces of investment advice is that investors should maintain a balanced and diversified portfolio: placing all of your eggs in one basket is a bad idea. Strategically diversification is a source of strength, and is a lesson the EU is having to learn very quickly in the context of its reliance on Russian energy.
This edition of The Malta Business Weekly covers three economic areas where Malta is innovating out of its core markets to keep its business offerings competitive. In this spirit of diversification Parliamentary Secretary Dr Jose Herrera recently launched the consultation process for an Integrated Maritime Policy.
The parliamentary secretary explained that the maritime industry contributes 20,000 jobs and €600 million to the Maltese economy. The best way to protect this area of the economy is through diversification. This is why the consultation discusses ways that coastal tourism, and maritime transport, can be bolstered, while it also explores a number of markets with the potential for innovation. The most interesting of the opportunities identified include maritime financial services, along with the oil and gas market.
In the interview carried in the current edition, Dr Zammit Lewis discusses efforts currently being made to diversify Malta’s tourism sector. Consumer expectations from a tourism product change over time and a package designed ten or twenty years ago to satisfy a mature, primarily British, “sun and sea” market ten or twenty years ago might not offer Malta the most lucrative opportunity looking forwards.
As new areas of the world develop (such as Brazil, China and India) and their citizens start looking for holiday destinations abroad their expectations will be defined by new tourist locations establishing themselves. The comparative importance of the UK market will decline and Malta’s English speaking charm will consequently need enhancing. A good example of what has already been achieved is in Malta’s offering to the cruise ships, and the development of new 5 star hotels over the last 15 years. The Ministry of Tourism is showing great vision when it talks of identifying entirely new tourist markets (such as the Middle East, India, Brazil and China), or new particular niches such as LGBT tourism, and wedding tourism.
Similarly in his interview, Alex Borg highlights the importance not only of improving the logistics services that Malta currently offers but of also diversifying out from these to provide new offerings to international logistics operations, whether these be free-zones, or warehousing facilities tied into the airport. Malta is lucky in that its port and airport are located only 8km and 11 minutes apart, with an area already conveniently dedicated for industrial use separating them. The key is that it is not only essential to improve the existing resources, but also important to identify new opportunities.
The word “agility” is much used in contemporary business, suggesting the ability to respond to a dynamically changing environment. Small economies, such as Malta’s, are both limited and enhanced by their small size. With more finite number of resources, Malta has only a limited number of fingers to put in different pies: whereas a large economy can be in hundreds of different industry sectors, Malta can only diversify so far, leaving it far more exposed to sudden changes EU legislation or market trends for example. On the other hand, by being small Malta can also be agile. Malta has fewer levels of bureaucracy between businesses and the legislature, and so can be more responsive to the needs of the economy in drafting policies. In a dynamic a rapidly changing global economic environment, diversification is Malta’s closest ally through history, and will remain so into the future.