84% of executives surveyed in the annual EY attractiveness survey think that Malta is attractive for Foreign Direct Investment. FDI is an important source of job opportunities, market expansion as well as having a positive ripple effect on any local economy.

It has slumped all over the world in 2014, however Europe has managed to beat the trend, with FDI rising by 36% over the same period.

According to the EY attractiveness survey, the main features attracting FDI to Malta include stability of social climate and stability and transparency of the political and legal and regulatory environment.  Areas that are hindering FDI mainly relate to transport and logistics infrastructure, research and development and innovation environment, and lastly the domestic and regional market.

EY Senior Manager and EU advisory project leader Simon Barberi who conducted the survey said that “it gives us an opportunity to compare Malta with other countries,” and that this year the focus was on “the perceived openness of businesses.”

According to the survey, the number of companies that intend to be present in Malta in 10 years time has risen from 59% in 2014 to 74% in 2015. This points towards a perceived positive outlook on Malta’s future political, social and economic stability.

82% of the companies surveyed said that they are willing to invest in training to develop skills, this comes at a time where global labour markets are demanding increasingly specialised personnel.  The companies willing to invest in training said that they would do this either through providing internships, vocational training or through financial help and sponsorship. According to results of the survey, the demand for skilled labour is outstripping supply, therefore training and development needs feature prominently in the needs of investors.

47% of companies surveyed said that they are able to find specialised skills in the local job market, however 53% reported that they must look outside Malta’s shores for the specialised skills they require.

The number of companies who say that they are unable to employ specialised personnel locally is down by 10% from last year. The results from this survey point towards the demand for specialised personnel outweighing the cost of labour; therefore finding personnel with the desired skill level is prioritised over the cost of labour.

According to the survey, in order for sectors to become leaders in innovation the top three areas that must improve are reducing bureaucracy, improving education and training in new technologies, and lastly developing a culture of innovation and creativity. Innovation is key for a number of reasons for any industry; it contributes towards increasing a competitive edge, ensuring a strong market position as well as ensuring a stable and prosperous working environment.

In the light of Europe’s economic turmoil and the ensuing persistently high unemployment investors have been reluctant to shift operations, however since 2014 this trend started to reverse. Reasons for this include geopolitical and economic uncertainty found in other regions such as Russia and China. This year the survey has found that investors’ perception of Europe’s attractiveness has continued to increase, a jump of 5 points since 2014 and 21 points since 2012.

60% believe that iGaming will be the leading business sector driving Malta’s growth in the next 5 years. This was followed by 43% who believe it will be fund administration and 41% who believe it will be asset management sectors driving growth in the next 5 years.

EY Managing director’s address

In his address to the conference, managing partner of EY Ronald Attard outlined three key objectives that would help in building on the attractiveness to investors. He mentioned namely fostering a high value knowledge based economy that would leave Malta less vulnerable to outside market forces, striving to be at the cutting edge of technological advancement as well as reducing bureaucracy to further increase attractiveness.  

He highlighted 6 concrete suggestions that would make Malta more open to business. He started by urging the country to take a lead in regulating online financial services, which can take the form of crowdfuning, peer-to-peer lending and similar platforms. He also suggested that Malta can be turned into a commodities trading hub by building on existing attractive features, citing Singapore as a leading example.

Mr Attard went on to mention that Malta can truly become a logistics hub if it ensures that it has the best legal infrastructure in Europe. He also suggested Malta becoming a hub for Asian e-commerce, making the country the key Mediterranean and European destination for goods sold online in Asia.

One of the most relevant points made in his concrete suggestions relate to the implementation of ‘best-in-class, web-enabled’ solutions in parking management, transport sharing and tracking. This was said in the light of the fact that new technologies available in current markets are counted as the main drivers of more efficient, comfortable and faster transport.

Mr Attard’s final concrete suggestion related to taking a ground breaking step by surveying the skill level of irregular migrants. He said that this is one untapped source of labour that risks becoming a drain on public finances as well as social services when it could be contributing to further economic growth.

He continued by saying that “as a small country we should also quickly adapt educational programmes to current skill needs.”

He concluded by highlighting the significant economic grounds that has been made, citing that between 2004 and 2014 the average household income increased by 13%, and that the size of the services sector spiked from 72% to close to 83%.