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Ready to shake up the old continent

Article - April 7, 2017

Malta EU Presidency promises international agenda aimed to refocus the European Project and showcase economic growth


The smallest member state of the EU began its six-month term as president of the Union this January, faced with challenges they plan to combat with their recent economic and policy-driven improvements. Malta is the second-best performing economy amongst its larger peers and an advocate of the EU, having received funding and achieved success at applying EU directives. The nation is comprised of almost 500,000 inhabitants, and is described as the essence of Mediterranean culture, due to its location and rich history that has made it an effective participant in the region over the years.

“We want to send the right message to our citizens, we want to address the deficit of the citizens’ faith in the European project and explain to them why remaining in the Union, why re-launching this project is the future of our continent,” says Ian Borg, Parliamentary Secretary for the EU Presidency 2017 and EU Funds.  

Malta will be forced to struggle with media coverage of their agenda due to the looming negotiations involving the United Kingdom’s exit from the organization. “Brexit” has given a name and a face to the rising anti-EU sentiment amongst many European citizens and caused doubt about the future success of the organization without its strongest member. Globalization assures that the U.K. will have to negotiate terms with the other member states, but the potential for dispute will come if the country is granted too much access without having to follow the rest of the requirements.

Malta could perhaps be best suited to begin these talks since their relationship with the U.K. has flourished due to historical ties and the English language. “Of course, the negotiations will not give the U.K. a better deal than the full membership. One cannot have access to the single market without having freedom of movement,” Mr. Borg says.

Given its location, Malta has experience with migration issues and is an advocate for providing asylum legally and progressively so that economic benefits can be seen for both member states and refugees. Malta’s number one priority on the agenda is migration. It will also focus on security, social inclusion, the Single Market, the neighborhood policy, and the maritime sector.

Prime Minister Joseph Muscat has said that while Malta leads, what is important is that “a great deal of energy must be put not only on listening to people, but also acting on people’s concerns.” Malta’s leadership could position it to benefit economically by showcasing that the EU’s larger competitors have a different growth cycle compared to the smaller member states and suggesting more flexibility in regulation to stimulate other economies as well.

Finance and Economy
The Bank of Valletta is the largest bank in Malta and is led by CEO Mario Mallia, who says that the current ICT infrastructure is making more opportunities for “businesses at every stage of their life cycle.” Mr. Mallia explains that, “75% of households are connected to the internet” and the “good competition in the communications sector” contributes to the improvement of services.

Left: Mario Mallia, CEO, Bank of Valletta. Right: Mario Galea, CEO, Malta Enterprise

Apart from the tax measures and attractive Mediterranean lifestyle that the island offers, Mr. Mallia says that the team at BOV want to be seen as “business enablers,” hoping to draw the right serious investors into their economy. This is an outlook adopted by many in the financial realm under the belief that progressive business regulations will continue to aid growth.

Other institutions, like FinanceMalta, have also worked to make that dream a reality. FinanceMalta was set up to help promote the island as an International Financial Centre and according to chairman Kenneth Farrugia, Malta has become a country that “has shifted its orientation towards regional business, particularly the EU context, but also international business.” Today, the nation attracts foreign direct investments from countries outside of Europe.  

As a result of the economic growth, companies like WasteServ, have a responsibility to operate as efficiently as possible. Exploring the possibility of converting waste to energy would help manage the environment of the island and create more jobs for both skilled and unskilled workers. The company’s tagline, “Creating resources from waste” suggests the mindset that the group strives for, which is managing materials better to reduce overall cost for a necessary service.  
“Growth can be sustained, be it financial growth, industrial growth or touristic growth. If you manage your essentials well. When I mean essentials, it is solid waste, water waste, electricity waste. Manage your waste well, manage your essentials well, and you have all that is required to sustain your growth,” says WasteServ chairman David Borg.

Managing space with the growth of industry is the duty of Malta Industrial Parks (MIP).

The MIP was created back in 1964 when Malta became independent from Great Britain. Since then the institution has transpired to manage 12 industrial estates in Malta and Gozo and hosts a number of prestigious brands like Playmobil and ST Micro Electronics. MIP is working to “turn our industrial hubs into advanced manufacturing spaces servicing cutting-edge industries,” says MIP chairman Tony Zahra.

Playmobil is just one of the examples Mario Galea, CEO of Malta Enterprise, cites as a company that “came to Malta as a product extension […] because their parent company wanted to set up a production, but today they basically live on their own.” In operation for over 50 years, Malta Enterprise has seen the international business model change over time with internationalization. Companies from Sweden, the U.S., the U.K., Germany, Italy, and the Middle East operate in Malta which means that, as Mr. Galea says, “our exports to the EU are about 35%, then we export to Asia around 20% […] and this is healthy, first of all because you’re dealing in different currencies.” The diversity of Malta’s economy is seen as a positive that will help stabilize the country during the Brexit, regardless of the country’s relationship with the U.K.

The Malta Tourism Authority works as the country’s brand promoter and helps both the public and private sectors advocate for travel. Malta has been ranked the seventh most “touristic” nation in the world and is a frequent stop for many cruise liners and vacationers hoping to soak in the sun and cultural history that the island has to offer.

Paul Bugeja, CEO of MTA, has dealt with the many facets of the tourism industry in Malta and is keeping the future in mind with new policies. A new “contribution” is tacked on to overnight guests in hotels, but at a low rate of “50 euro cents per person per night, maximum 5 euros per stay” which is then intended for the “Tourism Zone Foundation” that will be “managed by the tax authorities, by the government, their procedures, their systems, but the money will not go into the government coffers.” The funds will be specifically for “sustainable tourism projects,” says Mr. Bugeja, further securing the independent development of this sector.

The University of Malta (UM) is the only national institute in the country and is dedicated to developing business opportunities through an “incubator” that supports entrepreneurial students on and off campus. Prof. Alfred Vella, the 81st Rector of UM says that although the university has “not formally been called to assist” with the discussions Malta will be leading with the EU presidency, there are “in fact a number of our academics actually involved in discussions with relevant government agencies.” UM will be striving to maintain relationships with academic institutions in the U.K. Aside from the consequences of Brexit, other educational groups, like The Malta Council for Science and Technology (MCST), will continue to create innovative partnerships with outside countries.

MCST has been advising the government about science and technology policy since 1988 and helps manage academic institutions that take part in multi-national research projects. “We have been, even in the conceptual stages, collaborating with the Ministry for Education to ensure that what we are doing is still relevant to what the kids are being taught at school,” adds Dr. Jeffrey Pullicino Orlando, Executive Chairman of MCST.

The Malta College of Arts, Science and Technology (MCAST) also offers hundreds of vocational courses, designed to help students at different skill levels. Malta has no natural resources other than its people, which is why investing in education for the workforce is tantamount to the development of industry on the island. This concept has helped with economic growth for Malta over the last several years and as Dr. Silvio de Bono, President of MCAST, says, “There’s a complete permeability between what we’re doing and what the rest of Europe is doing.”

Left: Joseph Cuschieri, Executive Chairman, MGA. Right: Paul Bugeja, CEO, Malta Tourism Authority

The Malta Gaming Authority’s (MGA) portfolio includes 280 companies and around 450 remote gaming licenses and, with innovative and transparent policies, it has quickly become an example for other jurisdictions. Executive chairman, Joseph Cuschieri says that operators, “come here to operate in other jurisdictions so Malta is basically their place of establishment.” Malta is the “largest jurisdiction globally now” and is working to implement the “second generation of our legislation” to improve regulatory measures for the future.

The gaming industry accounts for 10-12% of Malta’s GDP and employs about 8,000 people directly. The 15% tax cap on salaries of highly qualified foreign professionals is drawing more talent to the island as well as the corporate tax refund system that makes the effective tax rate about 5% for companies.