The Upper Reach team interviewed Dr. Christian Cardona, Minister of Economy, Investment and Small Business, and asked him about the remarkable macroeconomic development of Malta. Dr. Cardona insisted in the need to take the extra step, and argued that all the elements needed for Malta’s exemplary performance have always been present.This is a year of celebrations for Malta, and one comes to celebrate not only what the country has achieved in the last 50, 40, 35 & 10 years, but more importantly, the firm direction where the country is going. At a time of global economic recession, Malta has been one of the fastest growing economies in Europe with this new administration even doubling its GDP growth for last year alone. How has this government been able to achieve so much in such a short period of time?
There are a number of factors which helped us achieve so much in such a short span of time. A dynamic government was not the only contributing factor- most of the elements that contributed to this success were in place for many years. The government, in the last seventeen months, have focused on utilizing our strengths: our English language, geostrategic position, stable social environment, superb quality of life, our excellent education system, and our health services. This, paired with the easy accessibility to government, contributed to Malta’s success. From a microeconomic point of view, we are focusing on positioning ourselves for further economic growth. One of the factors which would lead to increased activity is to micro target niche markets. That is what we are already doing. We are also currently trying to pre-empt what is happening in the international arena.The rise of the e-gaming industry here seems to be meteoric. How has Malta been able to essentially create this prosperous niche market out of nothing?
The manufacturing industry sector has evolved with time and as Malta developed economically it has attracted a different kind of industry than what we traditionally understood by the term. Through the years, successive governments managed to identify niche markets. For instance, we moved from manufacturing to electronic engineering. On the journey, we were also able to identify services which, together with traditional manufacturers, gave a strong industrial base to the country. Today, we have these niche markets, such as financial services, which we have had for 22 years! However, Malta is still an emerging financial services location.Many people are still innovating and implementing ideas that give the country a cutting edge. Our financial services were always built on our superb reputation.I read a recent interview where you said, “In business, the most dangerous position to have is a stationary one.” As such, which sectors of the economy would you like to promote for FDI for a more balanced economy?
We oversee the entity which is directly responsible for investment promotion, Malta Enterprise. Over the last year, we focused on attracting FDI, some of it from the EU and other areas. A portion of FDI is from traditional countries but we have seen more FDI beginning to enter the country from the Gulf, China, and Israel. This shows that we have positioned ourselves as a member of the EU but with the possibility of attracting investment as a gateway to northern Africa. We offer Malta as a hub and as a center of excellence. I would like to hear more about Malta Enterprise. I know you are spearheading an industrial policy.
At the moment, we are working on an industrial policy. An industrial strategy does exist, but we have yet to form a concrete industrial policy. This is something we are currently in the midst of producing. We identified a list of countries for Malta Enterprise which we felt had the greatest potential to attract FDI. We analyzed these individual countries to identify provinces that would fit mostly for investment. We also recognized specialized industries within this sub sectorial study, a process called micro targeting. We attracted investors in sectors in which they’d be comfortable to invest. Micro targeting did excellently. What is your target?
By 2015 I would like to achieve results which are consistent with what we managed to achieve in 2013. For example, in 2010, Malta Enterprise approved two FDI projects. In 2011, it approved eleven; in 2012, two; in 2013, 36. Approved projects leapt from 2 to 36. The UK is undoubtedly the most important foreign investor in Malta at the moment investing over 400 million Euros into the Maltese economy. With the trade deficit for Malta even decreasing around 100 million Euros over the last couple years, where do you see Maltese-UK expertise having a synergy?
Our relation with the UK is deep-rooted and historic, which creates a bond of trust. In addition, we understand one another’s culture. The British come here, and we frequent the UK as well. Many Maltese attend English universities for undergraduate and post graduate studies. Our long-standing relations are robust. The number of British companies in our economy is significant. We have help directly from the embassy, particularly in high quality investment and the manufacturing industry. The UK is one of the most important investors in Malta. We also have a number of British experts here who have assimilated the Maltese economy. Furthermore, we have attracted British companies working in software development. Besides having a highly qualified workforce, we speak the English language, which gives us a competitive edge. It is comfortable to be here for an English person. It is incredibly easy. Malta’s strategic location has for centuries ensured its economic prosperity, but have you seen dividends paid recently for your geopolitical location? For example, in the effort to reconstruct North Africa, has Malta been used as a base and port of departure for investment?
We are part of the EU, so we have to act according to how EU policy evolves. Apart from that, we have our own initiatives to promote business. Incidentally, yesterday we had a meeting with the MCESD, whereby we gave them an overview of how we are helping the Maltese business community in Libya to safeguard their business and their employees. As a country, we export no less than 280 million Euro a year. More than 65 million is in domestic exports. It is important for us not to limit ourselves to the European market, and our geostrategic location justifies our approach. It is vital and in our interests to display that as a member of the EU, we are deeply interested in what is happening in North Africa. We are continuously attempting to find opportunities for our businesses to expand operations to that region. We try to promote this ideal.Your ministry is not only in charge of attracting investment to Malta, but also of spearheading government investment in the economy as well through entities such as MIMCOL. Where so you see the need for government investment at the moment?
One of our top priorities is providing venture capital for SMEs. We are identifying Malta government investments and will create a Malta Equity Initiatives. With help from international partners, we will have a venture capital program for SMEs, with substantial budget streamlined from what the government has invested abroad. We firmly believe that we can utilize what the government has invested locally –to promote access to finance for locals and other SMEs in the form of seed funding. This time, we will come out with an interesting initiative. We intend to have everything in place by October. How important is the role of organizations under your ministry such as Malta Enterprise, MIMCOL, MCA, and LGA to the continued growth and prosperity of the Maltese economy?
As a government, we appoint highly professional people who prepare roadmaps and timeframes for us. The Ministry instates CEOs to run these entities and advise us in their plans. We try to have a plan for each individual entity. Our strategy for Malta Enterprise is not the same as it is for LGA or MCA. We structure our economic plan individually for individual entities. When we interviewed Mr. Curmi, the chairman of the Malta Chamber of Commerce, Enterprise and Industry, he outlined his new economic vision for Malta for 2014-2020. How do you ensure that the ministry is responsive to the private sector when it comes to business friendly policies and practices?
The Prime Minister was the first person to meet with the Chamber in order to discuss the new document, which was launched three months ago. Instantly, we circulated the economic vision that the Chamber gave to all Ministries. Last Tuesday, every Ministry handed the Prime Minister its reaction to the Economic Vision of the Chamber. We will consolidate each observation, fuse them into one document, send it to the Chamber, and start a discussion. This is a process not exclusive to the Chamber’s Economic Vision; we do it with the Malta Employers’ Association, with working unions, with the Chamber of Lawyers, and every other stakeholder. We can do this because we are a small country. You gave a speech recently where you noted, “We need to improve market conditions, with less red tape and an internationalization of companies, especially small and medium enterprises. Can you outline some tangible measures the government is taking in order to improve Malta’s competitiveness?
At the moment, we are reducing the requirements that were needed to participate in procurement processes. We are also a corporation. We have dissected the possibilities in making it possible for SMEs to participate in public procurement. We reduced the previously required bank guarantees, the five year experience; we tried to remove all unnecessary obstacles that existed before. This is an example of what we did with the director of contracts.
Regarding the Libyan crisis, we are paying the dues owed by the government to companies in Libya so they have cash in their hands. On a wider global arena, we are actively working for the internationalization of companies. We assist new companies with their own IT setup in order to foresee expansion and participate in international calls. We help plan possibilities of opening representative offices in other countries.One of the cornerstones of our report is what we are calling “Uniquely Maltese,” where we try to tell the story of how Malta has become the leading island nation in the world, with arguably Singapore as well. What would you say makes Malta so unique?
Being Maltese has many different meanings from a view of ethnic or racial identity. Malta encompasses many different nationalities that still consider themselves Maltese. Most of us have British, Spanish, or Italian ancestors. What makes us Maltese is the idea that we can create a country which is progressive, liberal, forward looking, comfortable for families to live in, comfortable for parents to have children in, and which is comfortable with new ideas which help civil society grow healthier and stronger. This is what makes us Maltese. The various governments have worked doggedly at the realization of these ideals. The time is now to initiate the next step: to unite all these ideas, and to excel in what we are doing.