Opinion writers on both sides of the political spectrum have long insisted that increasing the level of foreign direct investment (FDI) in Malta is paramount if the country wants to boost economic growth, create new jobs and encourage new investment within the sector.

Over the years the country has seen a marked shift from mass manufacturing to low yield, high added value enterprises. The impact of globalisation has been the cause of this change as emerging economies such as China and India began to attract high yield companies to shift their business to a location that offered cheaper production rates and a much cheaper workforce. Inevitably, this had an effect on companies in Malta, particularly in the textile sector.

Local industry rose to the challenge admirably in the late 1990s and in the past few years we witnessed the growth of many enterprises focusing on information technology, communication and pharmaceuticals. Attracting new investment remains a priority for the government and Malta Enterprise was set up specifically to do just that. The question, however, is whether we have been effective enough in attracting the necessary level of FDI to boost the economy.

In an interview to TMID last Monday, Opposition Leader Dr Alfred Sant said the country needed to attract higher levels of investment and he insisted that manufacturing should not be written off. There is still a lot of potential in niche areas and given the right incentives “it might even increase jobs by 1,000”, he said.

We agree but the focus must be on those areas that generate value added rather than high yield. The government and the constituted bodies agree in principle that this sector cannot be left to wallow in its own sorrows but the country cannot support those industries that are losing ground and are no longer competitive. Hence, to attract FDI to Malta we must take stock of the reality of Maltese industry and act accordingly.

Malta’s dependence on manufacturing is one of the country’s problems and possibly a high-risk area. According to Dan O’Brien, senior economist/editor with the Economist Intelligence Unit, Malta had many strengths to attract foreign direct investment, however with manufacturing constituting 23 per cent of the local economy, there are risks involved. To avoid such risk, the country needs to attract a mix of both manufacturing and services.

This is the right approach and this line of thought is very much in line with the Maltese authorities’ thrust in developing Malta’s services sector. On this point there does not seem to be disagreement.

Attracting FDI is not something that happens overnight. Even when a company shows an interest in setting up shop in Malta the process takes considerable time. So while Malta Enterprise may be criticised for keeping a low profile and not giving details of its efforts to attract investment, we have to accept that it is a process, not a one-day event.

Having said that, we agree with Dr Sant that investment promotion is part of the process. Here we feel that Malta Enterprise can explain more what it is doing in this regard and how the island is being promoted. Should ME be focusing on advertising and marketing in the media or should the effort start at grassroots level, starting from the country’s representative offices abroad? Apart from the pharmaceutical industry, what other key areas have been identified? How is the ‘mix’ constituted and which countries are we trying to attract investment from? Is Malta Enterprise looking at single, high value-added entities or multi-national corporations?

As a small country, Malta has a lot of potential to attract FDI – in all sectors. With global FDI expected to increase over the rest of the decade and the success registered by other ‘small’ countries, Malta must step up a gear in this regard. We know what the situation is like, we know what our strengths and weakness are, and we know what needs to be done. But are we doing enough? Are we maximising our resources? And, finally, are we meeting our targets?