German investment flows into Malta do not seem to have been impacted by the country’s greylisting, Germany’s ambassador Walter Hassmann told The Malta Independent in an interview
“I haven’t seen any drastic results, though such an impact is hard to trace and I only have limited insight. Numerous German companies have been established here for so long, I am not aware of any company refraining from investment”.
Germany is now Malta’s top export market worth €424 million in 2020, and was worth €495 million in 2019. Imports from Germany, the seventh leading source of Malta’s imports, were worth €329 million in 2020 down from €508 million in 2019.
The German investment stock in Malta grew from €11,3 billion in 2016 to €22,1bn in 2018 and 2019, with the number of investing companies increasing from 77 to 86. Their collective annual turnover increased from €4.6 to €6 billion.
The Committee of the German Business Council–Malta set up within the Malta Chamber of Commerce, Enterprise and Industry promotes, facilitates and enhances business exchanges between the two countries, while also seeking to form partnerships with the leading stakeholders including Malta Enterprise, Finance Malta and the German Chambers of Commerce and Industry.
“I am proud of what German companies have achieved in Malta in a broad range of sectors over several decades, such as, for example, the local operation of the German Seifert Systems Group”, the ambassador said.
The company designs and manufactures thermal control solutions supplied worldwide to the telecoms, transport, automation, machine tools, laser, food and beverage and renewable energy industries. With only one other overseas production unit, in the USA, its Malta facility started up in 1991. The Ħal Far-based plant is now the group’s largest manufacturing unit. A new ‘smart factory’ €8 million extension creating some 100 new jobs will start operating there this September, based on Industry 4.0 principles i.e. an interconnected network of machines and communication mechanisms using the Internet of Things (IoT). The company has recently been audited and certified as a carbon neutral manufacturing facility, the first in Malta to achieve this mark.
In contrast, the stock of Maltese investment in Germany fell from €380 million in 2016 to €231 million in 2019, the number of investing companies declined from 31 to 16, while annual joint turnover went from €367 to €45 million. At the end of 2019, immediate and indirect total inward FDI into Germany totalled €556 billion.
“Maltese investors in Germany initiate their activities mainly through business channels, their partners in Germany or the German equivalent of Malta Enterprise, the federal government’s Germany Trade and Invest, rather than via our embassy”, the ambassador explained. “Though we are always pleased if they let us know. Other approaches can be through the authorities of Germany’s 16 federal states or its cities”.
The ambassador sees a range of new investment opportunities in Germany resulting from the recently announced economic policies of the new three-party coalition government (Social Democrats, Greens, Liberals) which took office on 8th December, under the leadership of Angela Merkel’s successor as the new Federal Chancellor, Olaf Schulz.
At a press conference on 11 January, Robert Habeck, Vice-Chancellor and Ministry for Economic Affairs and Climate Action emphasised that Germany must do far more to achieve its CO2 reduction goals and would dramatically boost renewables, climate-neutral production and energy efficiency, needing to triple the speed of greenhouse gas emissions reductions. A legislative package to be put before parliament this summer would make renewables a matter of national security and bolster Germany’s National Hydrogen Strategy, also enhancing energy-efficiency standards in construction. Following the 2010 decision to phase out nuclear energy, the remaining three stations will be closed before the end of this year, while the coal sector will be shut down by 2030, instead of the previous government’s target date of 2038.
GTAI CEO Robert Hermann foresees major new chances for agile and innovative domestic and international companies which can help Germany reach its climate goals.
“Disparities remain between the former East and West Germany”, the ambassador commented.
“The East’s infrastructure is mostly brand new (built since reunification), but its degree of industrialisation remains below that of the West. The project for a huge Tesla factory in Brandenburg is thus encouraging. East income levels remain slightly lower – the gap closing more slowly than we would wish – and there are shortages of apprenticeships in some sectors. Labour force qualifications including in digitalisation management are the main challenge for the country as a whole, as well as the many changes climate policies will require in industrial processes and structures - and thus relocation and retraining of workers”.
Turning to EU issues, the ambassador hailed Maltese MEP’s Roberta Metsola’s recent landslide election as President of the European Parliament as “wonderful. For too long, the EU has been perceived by many as the few biggest member states doing deals with each other. But now its smallest is represented in a top position”.
“The current French EU presidency faces many challenges, including the pandemic recovery, greater European sovereignty, strengthening the Union and its social democracy, security, the need to arrive at greater self-sufficiency in key products such as electronic chips. Recently, Germany and Austria launched an initiative to restart EU electronic components manufacturing with a new factory in Austria. Shipping is another urgent issue – a Maltese businessman told me that the global sector would continue in disarray until the end of this year, or longer.”
Migration, a huge challenge to Malta, continues to be an extremely urgent question needing joint EU action. “Progress can only happen with higher solidarity between all Member States. But the issue remains that not all of them are co-operative. As French President Macron has made clear, we have to find ways and means to move ahead”.
“A possibility currently under discussion, though far from ideal, could be a kind of ‘coalition of the willing’ – a group of Member States ready to act. We cannot watch human beings drowning in the Mediterranean while being seen to be twiddling our thumbs. Under the Malta Declaration of 2019, Germany, France and some other countries agreed to accept migrants landing here, but since then, no other Member State has joined the initiative. While the most pressing issue is the central Mediterranean route, there are also the western and eastern routes”.
“Germany is very willing to help Malta bilaterally, but a European level solution is urgent, we don’t have a lot of time”.
A major economic challenge as Europe recovers from the pandemic is the current distribution of wealth, with the richest becoming even richer while the poorest continue to struggle. “This is not something we should just accept on the European level. The challenge is less prominent in Germany where the minimum wage will shortly be raised to €1200. There used to be a wealth tax, a highly controversial issue”.
Germany is this year’s Group of Seven Nations (G7) president, with a heads of state or government summit taking place in a castle in the Bavarian Alps in June. Members are the wealthiest liberal democracies - Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, which together account for over 50 per cent of global net wealth, though only 10 per cent of the world population. The European Union is also a member with all the privileges and obligations of membership, but without the right to host or chair a summit. Selected non-g7 nations are invited to participate in discussions: thus two of this year’s three foreign ministers’ meetings will respectively include colleagues from Africa and the Pacific.
Ambassador Hassman indicated that “the main G7 topics will include climate change issues, the Covid pandemic and preparing for future ones, infrastructure problems including shipping, the resilience of democracy – a topic Germany wishes to put back on the international agenda. There will be a great emphasis on dialogue, especially with civil society – both inside Germany and within partner countries – involving NGOs, trade unions, think tanks, businesses and youths”.
Prior to his posting in Malta in September 2018, the ambassador served as a senior diplomat in Oman, South Africa, Turkey, Hungary then becoming, ambassador to Yemen and Afghanistan. “My wife and I are very happy in Malta, walking and sailing our small boat as our main leisure activities. The (pre-pandemic) cultural life is amazingly varied and the Maltese people so welcoming and friendly”.