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. H.E. Dr Joseph Muscat has stated: “Malta of today doesn't just stand on its own two feet; it punches above its weight”. What is Malta´s next punch? How do you see the economy evolving?
Malta has performed extremely well during the duration of the crisis and post crisis. We overcame problems other countries struggled with, particularly issues of high unemployment and difficulties in the banking sector. As a Chamber, we attribute that to the fact that we have a very robust, traditional, and conservative small banking sector that was not exposed to the kind of risks to which international banks were. High unemployment was not a significant issue due to the governments’ economic diversification initiatives over the years.
Malta is often associated with sun and sand like other islands. This may give the wrong impression that we depend fully on tourism. This is not the case. Though the island is small, the economy is extremely diversified. The country has a strong manufacturing sector, uncommon in similar islands. Our manufacturing industry developed in the 1960s due to a strong presence of German manufacturers in Malta. There were also British players. These companies have been key figures for the past 50 years due to profitable experiences. They managed to build a very high level of expertise within their workforce, a rare attribute of emerging countries. Some of the printers and mould makers in Malta are the best in the world.
Certain German factories have had a presence in Malta for a long time, one in particular producing plastic toys for children for international markets. An American behemoth has had a legacy operating in Malta and the country is one of their three top locations. Of course Malta has constraints in terms of what one can produce and export. We don’t have natural resources. We import raw materials and export manufactured products. Our only resource is the human resource, besides the sun and culture when it comes to tourism. It is recognised that when it comes to the emerging sectors in the knowledge-based services, our human resources may not be as yet sufficiently developed to cater for the demands that are being made by service companies wanting to establish their operations in Malta. It is difficult to develop, from a population of under half a million people the skills and expertise required in these new sectors. However, we boast the presence of very dynamic education and vocational institutions. Besides, now that Malta is part of the EU, we can get expertise easily to fill the gaps in our economy. We should not halt progress just because our labour pool is small in numbers. . We must continue to drive progress and, in the interim, attract expert people from abroad. Fortunately for us, foreigners find Malta a very congenial place to work in. Over time, people would transfer knowledge to the locals. I attribute our success to three main factors. One is the existence of a diversified economy and a sound banking system at the time of the crisis. Another factor is the political stability backed by sound democratic and legal systems which has prevailed in Malta since its independence from Britain fifty years ago. The other very significant advantage is the fact that we are a bilingual population where both English and Maltese are official languages in terms of our Constitution. Additionally many people speak Italian. The knowledge of English has certainly helped our young people to find jobs overseas and also facilitated the establishment of many operators in the financial, gaming and maritime sectors of business.
The Libya crisis made Malta suffer back in 2011 and we are living another crisis at the moment. There are many Maltese businesses with links to Libya because of our proximity with North Africa (we are just a 50-minute flight away) and which are now being affected by the ongoing turmoil in Libya. Many business people, particularly family businesses, saw Libya as a natural extension of their local operations. It was easy to expand their operations there much easier than in Italy or Germany. As a Chamber, many of our members have activities in North Africa. British brands have entered Libya through Malta at times when doing so on their own was not possible. All these brands are there now because of the Maltese connection.
Malta remains an attractive and strategic designation for companies worldwide within which to base their operations because of economic and political stability, excellent ICT connectivity, and a hard-working and English-speaking workforce, to name a few factors. In terms of financial incentives though, what would you say attracts companies to set up operations in Malta?
The advantage that Malta has to offer is its size. Being a small country, there is easy access to the decision makers and the regulators. In certain large jurisdictions operators in financial services are experiencing difficulties. In Malta we now have a single regulator that regulates banking, investment services, insurance, and funds management. The fact that there is one entity to deal with, rather than three or four, is one of the factors why financial services have grown so much. And the regulator is easily accessible. If you request a meeting with him, you will get it in short time. Speed is another determining factor.
Your Chamber is responsible to represent your members’ interest vis-à-vis government and the State. How do you interact with the government to ensure that business and investment friendly policies are implemented to help the economy grow?
We organize sectors in the Chamber in three economic groups: services, trade, and manufacturing. Everyone wishing to become a member of the Chamber should fall into one of these three groups. Whenever a sector has an issue, they come to the Chamber, and we act on their behalf with the competent authorities. For example, when an issue arose among the three telephone and mobile operators we have in Malta, which are all Chamber members, they approached us to facilitate reconciliation. Another example of ways we interact on a higher level with government is the recent presentation of our Economic Vision for the next five years (2014-2020). We are very proud of this because it is an Economic Vision not written by economists but by a group of 20 CEOs and chairpersons of some of the largest leading organizations in Malta. They are chamber members; we brought them together, formed a think tank, and have been writing this for the last 18 months. The vision contains 52 recommendations that we have proposed to government. This is another way of how the chamber works. It is proactive. This is a business agenda to government, rather than a government agenda for business. We understand it has been well received.
In our Economic Vision We identified 11 sectors where we feel that Malta should pay particular attention to. For each sector, we make recommendations about how growth can be achieved. The main message we want to send is that we must be focused on what we do. Malta has limited resources, and we therefore are asking government to be selective and to focus on sectors and partners which will be of greatest benefit to economic growth. We want a balanced and stable economy driven by the private sector. The present centre-left government has expressed on many occasions its pro-business attitude and declared its belief that Malta’s economy should be driven by the private sector, with government as an enabler. In brief, the main recommendations we are making is to try to be smart, to make business feel comfortable and to incentivise investment. This is the kind of message we are sending. It is common sense, but sometimes common sense is needed.
Often you see reports made from academia, which are macro oriented. This seems to be a pragmatic approach. Your Chamber is also responsible for representing your member’s interests at the European level as well. As this year marks Malta’s 10th year anniversary of EU accession, what would you say have been the biggest benefits of EU membership for Malta?
The benefits were huge. The two main political parties now agree it was a good thing for Malta. No one doubts the fact that Malta benefited from becoming a member and adopting the Euro. It facilitated trade and opened markets. It also endorsed Malta’s political and economic stability. It is important to Mediterranean countries to have to comply with economic, fiscal, environmental, and labour discipline). Our country inherited a high work ethic from the British. It has helped a lot in growing certain sectors, and particularly our financial system. Our education system is based on that of the UK. Many accountants and doctors in Malta graduate at the University of Malta but are also qualified in the UK. This works extremely well. Another positive aspect was the financial assistance for expanding our production base. We used it for infrastructure, like roads and waste management, and restoring our rich cultural and architecture heritage.
As the primary representation of the private sector, the Malta Chamber of Commerce, Enterprise and Industry has sought to take an active role in the consultation process on the Programming of European Funds for Malta for the 2014-2020 period. As such, how would you assess the current allocation of EU funds for 2014-2020?
We have pronounced ourselves as a Chamber to be in agreement with Government’s broad plans. We have no real objections to their planning. Some of our recommendations have been, or are in the process of being implemented. Naturally, we would like to see more allocations to SME and private sector initiatives. We really believe that when there are higher allocations for the private sector, the value added you get is much higher. We would like more companies exploiting the single-market opportunities. What we ask for is a better allocation and setup help to help local companies export and promote their products abroad. The government has been sympathetic to this idea. The single-market, sounds like a good proposition for a small island economy like that of Malta, but we have to face the reality that, Malta businesses being small, lack the necessary financial and marketing resources to penetrate the EU single market. This is the area where Maltese businesses need help.
Malta is not only growing tremendously economically, but it has played, and continues to play a vital role in stabilizing the surrounding region. How important is this role of peacekeeper and interlocutor for Malta’s continued growth and international image?
It is very important. We are intrinsically European but because of our history and location, we understand the Arab culture. To a large extent, we are trusted by Arab countries in general. I can’t recall any incident that we ever had with our neighbouring countries. The language helps as well. We don’t speak Arabic but our language is of Semitic origin and therefore very close to Arabic. More importantly, we are able to understand their culture very well.
There is no British Business Council because your ties are so tight. Could you give us a background about how you facilitate business between Britain and Malta?
We don’t have a UK-Malta Business Council because our trade with the UK comes naturally. Our members are very experienced in doing business with UK companies and counterparts. Many young people were trained in the UK; our graduates had internships or apprenticeships in the UK more than any other countries. Most of our doctors have gone through post-graduate courses in the UK. Traditionally we have had strong links. We therefore do not see scope for the presence of a UK-Malta Business Council within the Chamber. We keep a very open and close link with the British High Commission in Malta as well as with the Malta High Commission in London. We have good relations with the two. There are about 12 ambassadors in Malta and they all visit the Chamber on a regular basis. If they don’t, we meet them in other forums. There is a close working relation with embassies.
Considering the systemic and deep relationships between the UK and Malta, if you had to choose one or two, where do you see potential for growth?
I think the financial services, digital industries, and creative sectors.
Malta attracted 3x the amount of FDI in 2013 compared to 2012 and this is combined with a recent EY attractiveness survey, outlining the optimism to expand for a majority of the top 100 domestic Maltese executives as well. What advice would you give to all these potential investors about investing in Malta?
My advice is for them to come and see for themselves. This is obviously biased, but I have been to a number of countries in the world and still think this little island combines many positive factors. Standards of living are high and this is something people do consider before settling. The island offers a very high quality of life. We offer a kind of lifestyle that people enjoy. Of course the climate helps! We don’t go on holidays in August- we stay here and enjoy. We have a very clean sea and it is difficult to find one better than ours in the Mediterranean. Malta’s summers are fun, long, and best spent here.
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