While the government promotes Malta as a hub for igaming, blockchain, cryptocurrency, medical cannabis, and now Artificial Intelligence, the regulatory and business environment in the country is not as welcoming as the image promoted by government statements.

Malta is the most difficult place in the EU to do business according to The World Bank Doing Business 2020 report and the situation has been getting worse over the last three years,.

Malta has fallen 12 places in the annual report by the World Bank since 2017. The country is now ranked lowest in the EU, and is being surpassed by countries such as Albania, Tunisia, Uzbekistan and even Bhutan.

The Doing Business 2020 report takes an in-depth look at the costs to companies of business regulation. Some 190 economies from Afghanistan to Zimbabwe are compared across sub-indices including starting a business, getting credit, getting utilities, trading across borders, paying taxes, and labour market regulation.

Malta ranked at 88 this year, a drop of four places from the previous year, and a major decline from its best ranking of 76 in 2017.  Only a few improvements have been made in Malta's regulatory environment, according to the report. Not surprisingly, this includes making it easier and faster for businesses to apply for construction permits.

The other areas where Malta showed improvement were in the reliability of the national power supply, the creation of a website for online registration of employees and VAT, and the introduction of new annual leave regulations.

Despite these poor results, Prime Minister Joseph Muscat told parliament last week that "Malta is a top performer [...] We are on par with Germany." That confidence seemed to contradict the latest EY Attractiveness Survey 2019, where only 46% of foreign respondents said they were happy with doing business in the country.

Finance Minister Edward Scicluna echoed the prime minister's confidence in an interview with South European Summit. "Many countries are much more advanced than Malta, but they get it wrong when it comes to regulation," he said. "They are so heavy and so bureaucratic, and it takes time, while in Malta if we hear of a disruptive idea, which you sense that is going to be the next big wave of economic activity, [we] grab it and run with it and build a regulatory framework for it."

Unfortunately, that strategy doesn't seem to be working. Despite branding Malta as 'Blockchain Island', a number of crypto companies have already left Malta less than a year after three highly anticipated cryptocurrency acts entered into force.

Access to banking seems to be part of the problem. Corporate service providers complained it is "nearly impossible" to open a bank account in Malta, a sentiment echoed in a number of industry articles.

In June 2017, four months before she was assassinated, journalist Daphne Caruana Galizia had reported that Deutsche Bank had cut all ties with Bank of Valletta. ING followed suit in June 2019, ending BOV's sole remaining US dollar correspondent banking relationship. The bank has not yet found a replacement.

BOV is also conducting a major de-risking exercise, following a review by the European Central Bank, and is terminating relationships with 'high risk' clients including igaming companies. The gaming industry currently accounts for approximately 12% of Malta's GDP.

Four igaming companies have been shedding staff over the last few months. Multilotto, Stars Group, and GiG have collectively made some 90 redundancies, with more expected before the end of the year.

Malta has also come under increasing scrutiny from institutions and regulatory bodies across Europe. The country failed the Council of Europe's Moneyval anti-money laundering evaluation in 2019 and was given one year to fix the issues raised or face potential blacklisting procedures.

Malta's Moneyval rating was "poor overall", with low scores in areas that include risk management, money laundering investigation and prosecution, and the prevention of financial crime.

Clearly, this 'pro-business' administration has not delivered the expected results, going by the above figures. For all the GDP figures, and the approved construction permits and the increased presence of foreign workers in the economy, the economy is slowly grinding to a halt. What is needed is not tinkering with this or that detail but a radical change of approach. This is what the constituted bodies should be telling government, rather than be pussy-footed about it.