The yearly survey on Malta’s attractiveness by EY is a much-awaited event particularly within the business community. 

This is a study which gathers insights from existing foreign direct investment (FDI) companies in Malta, provides a comprehensive overview of the island's investment appeal and areas for improvement. 

The data that is presented is an important litmus test for the Maltese economy and its capability to attract new investment from abroad. It is even more important within the context of the Prime Minister making it clear that he and his government want to pivot the country’s economy towards more high-value sectors – which are sectors which, inevitably, require a certain degree of investment from abroad.

The findings of this year’s survey – which was carried out with investors and which were launched earlier this week – are also reflective of the general public sentiment about how things are going in the country right now.

The survey found that 54% of existing foreign investors considered Malta to be an attractive location in this latest study. This is a decrease of 5% from last year and is the second lowest in the last decade. The low point was recorded at 37% in 2021 – but that was in the midst of the Covid-19 pandemic.

Investors acknowledge the strategic advantages that Malta offers but also recognize that there are pressing challenges that need to be addressed. These include the rising cost of living and the strain on the labour market, which could potentially impact the country's ability to sustain long-term growth and retain its attractiveness for Foreign Direct Investment (FDI).

Malta's corporate taxation is still the leading factor in its FDI attractiveness, with 75% of respondents acknowledging it as a pivotal aspect of their investment decision – but amidst continued discussions about a global minimum tax regime, that in itself could turn out to be an advantage which is lost.

That is reflected in the survey: 50% of respondents are worried about this happening.

However other worries all seem to reflect issues faced by local businesses as well – these being skills shortages, reputational concerns, cost competitiveness, physical national infrastructure, and challenges with banks.

Prime Minister Robert Abela told those present at EY’s Conference that the Cabinet had spent the summer working on reviews of the investment promotion strategy, plans to improve the quality of tourism, short-term measures to tackle traffic problems, and a new economic migration policy.

These are all important themes which are of great concern to investors – as discerned from the survey – but also to the everyday citizen, who are now also feeling the same strains described by businesses in the survey.

These are principles which the government is encapsulating in a new Vision for 2050 which was also announced last week.  It’s something that the government is placing a lot of emphasis upon, perhaps in response to – somewhat warranted – criticism that the Labour Party has had no long-term plan for the country since coming to office, particularly as it’s already trying to steer Malta’s economy on a different path to the one that it was set on by the Labour government itself.

Addressing the people’s concerns and addressing the concerns of investors will go hand in hand, and if Abela does want to steer Malta towards a high-value economy, he’s going to need foreign investment to help him do it.

EY’s survey shows that this is no given that this will happen, especially if nothing to fix what is currently wrong is done.