Malta: An Overview
The small but highly ambitious island of Malta has become one of the most attractive
investment locations in the Euro-Med region, and is well on its way to achieving its vision
of becoming the regional centre of excellence in a number of priority sectors.
Six years into European Union membership and having adopted the euro as its currency
on January 1, 2008, the small island state of Malta is beginning to enjoy the results of
years of sustained efforts to transform its economy into a sharply-tuned instrument of
growth, custom-designed to address the challenges of the globalised world. Positioned
strategically between Europe, North Africa and the Middle East, the island promotes
itself as a stepping stone to these markets and is building a strong reputation as the
ideal regional hub for expansion-focussed businesses.
The island’s legislative and regulatory systems, formulated and implemented over the
last fifteen years to create a solid yet flexible framework for business; a wealth of highly
skilled, flexible professionals in every field; its state-of-the-art telecoms infrastructure,
ranking amongst the very best in Europe; the injection of EU structural funds
accelerating the upgrading of the general infrastructure; together with its central
Mediterranean location and sun-kissed lifestyle create a unique combination that has
enabled Malta win both investment and international recognition.
History
With a history that spans seven millennia, the island - already blessed with the exquisite
natural beauty of its golden limestone, crystal clear sea and charming rural landscape -
is a treasure trove of historical heritage. From the extraordinary 7,000 year old Neolithic
temples, the oldest known human structures in the world, to Phoenician shrines and
burial places, Ancient Roman villas, bath houses and olive oil presses, Medieval chapels,
Baroque Palaces and Rennaissance cathedrals, the island provides a living snapshot of
an enduring and fascinating history.
Just over 100 square miles in area, the Maltese archipelago comprising Malta, Gozo and
Comino is located right in the centre of the Mediterranean Sea. Inevitably, its history is
intrinsically linked with its location, as a succession of foreign conquerors sought to rule
the islands to take advantage of their strategic location, from the Phoenicians, the
Romans, the Arabs, the Normans, the Bourbons, the Knights of St John, a brief French
rule under Napoleon, and finally the British until 1964, when Malta won its
Independence.
This has shaped Malta’s 413,000 inhabitants, who have become the most international
of peoples, blessed with creativity, determination and the unique ability to adapt to new
ideas and adopt - and improve - the best of them to their ultimate advantage.
Economy
Malta’s GDP stood at around Euro 5.7 billion at the end of 2009. With the exception of
2009, when Malta had a negative growth of 1.9% in the midst of the recession (which is
nevertheless a better performance than the EU27 average, where the economy
contracted by 4.2%), the country is consistently registering growth in its economy, with
rates amounting to 4.7% in 2005, 3.3% in 2006, 3.9% in 2007 and 2.7% in 2008. Eurostat
projections for 2010 forecast that Malta is expected to bounce back with a growth rate
of 3.1%, whilst the same projections show a growth rate of 1.8% across the EU27.
These encouraging statistics are reflected by the fact that, at around 102.1% of GDP in
2008, the stock of foreign direct investment in the Maltese economy is by far the
highest when compared to that of Malta’s major competitors and some 40 percentage
points above the EU average.
Over the past two years, characterized by the worldwide recession and efforts towards
recovery, Malta managed to attract new projects and encourage expansion of existing
operations to the tune of €100million, while it also succeeded in containing the
unemployment rate to around 6% - the fourth lowest rate in the EU, when the average
across the EU has reached almost 10%.
The island’s current success was not achieved overnight: In the four decades since
Independence, the foundations for a sustainable economy based on tourism, industry
and services were laid. Initially, from the mid-Sixties to the mid-Eighties, Malta sold itself
as a manufacturing base for products like textiles and electronics, using low wages and
plentiful supply of labour as its main selling point.
However by the end of the Eighties it was recognised that educating the work force to
include highly qualified professionals would attract higher value added products and
services to the island. This has enabled the country to react when labour intensive
industries moved to countries with lower cost, with Malta climbing up the value chain
and shifting to knowledge based industries in which its highly skilled workforce excels.
Sectors driving Growth
Malta's accession to the EU in 2004 brought significant sector-specific advantages. One
of the main reasons Malta has become such an attractive domicile to many financial
services firms is the passporting rights firms enjoy to other EU and EEA areas, which has
led to Malta becoming a magnet for insurance and fund management firms.
Indeed, thanks also to a sound regulatory background, the financial services sector has
grown by around 22 per cent in 2009 while the resilient banking sector not only did not
fail but actually registered strong balance sheets and increased its debtor base, despite
the international crisis.
This sector is one of the priority sectors which the Government has identified in its
Vision 2015+, which seeks to transform Malta into a centre of excellence and a regional
hub in a number of sectors.
ICT is another of these sectors, with Malta-based firms enjoying success on an
international stage. Malta-developed software is making substantial leaps forward,
while remote gaming is fast becoming a major revenue earner and employer, again
driven for the most part by effective regulation. The new SmartCity project, a self-
sustained township in this industry with an investment exceeding $300 million by the
developers of Dubai Internet City, Tecom, is expected to give a further boost to the ICT
industry in Malta and is gradually shaping up.
Thanks to its excellent communication infrastructure, with 95 per cent of its territory
covered by high-quality broadband, Malta has also managed to develop its shared
services sector, attracting scores of call-centre and back-office support operations which
also benefit from the fact that English is one of the two official languages in the country.
Priority is also given to the tourism industry, with over 1.2 million tourists visiting the
country every year. The recent decision to open up the market to low cost airlines has
given the industry a massive boost, and new niche segments such as weekend visits and
short breaks are successfully attracting a previously untapped, less seasonal-centric,
market. Moreover, Malta is the port of call for over half a million cruise liner passengers,
with this niche expanding and an ever-growing number of companies including Malta in
their Mediterranean itineraries. New investment in five star hotels and conference and
incentive travel facilities continues to strengthen the island’s product offering, and the
MICE travel industry keeps going from strength to strength.
While the traditional selling points of Malta have been its vast history, its eclectic
culture with influences inherited from foreign rulers of the country, and its natural
beauty and almost year-round sunshine, in recent years the country has seen a surge of
visitors that travel to its shores for medical tourism or for education purposes – another
two sectors given priority under Government’s Vision 2015+.
Malta offers a widespread range of courses, starting from basic studies in English
language for foreigners, to degree or postgraduate level courses given either by the
University of Malta or by foreign universities through their representatives in Malta,
where they can benefit from lower living costs. The country is also an ideal base for
companies to set up their regional training centres, is it also offers specialised training
courses in such fields as Health and Safety, Risk Assessment for oil and gas industry, as
well as Flight Academies, amongst many others.
Having been the pioneer in high-quality healthcare in the Mediterranean at the time of
the Knights of St John, Malta keeps offering first class medical facilities in public and
private hospitals and clinics. Its mild climate make it an ideal location for medical
tourism, where patients can spend their rehabilitation period. The country has also
managed to diversify its offering in this industry, establishing a strong presence of
manufacturers of medical devices and generic pharmaceuticals. In particular, the latter
have benefited from a wide interpretation of the Roche-Bolar exemption, which creates
a favourable legal framework allowing generic drug development and stock piling ahead
of patent expiry. The industry is also looking ahead, and with the setting up of a new Life
Sciences Park in the coming years it is expected to give a further boost to R&D and
innovation in life sciences, biotechnology and other related fields.
The manufacturing industry nowadays mostly comprises high-end operations with a
high added value. Besides the aforementioned pharmaceuticals and medical devices,
Malta specialises in the production of electronic components which represent one of its
major exports, as well as precision engineering, automotive components, foodstuffs and
beverages. These are also complemented by services provided to the maritime and
aviation industry, with the Malta Shipyards having found a new lease of life and the
Aviation sector growing significantly and attracting some of the world’s leaders in the
industry, particularly in the maintenance, repair and overhaul (MRO) sector such as
Lufthansa Technik and SR Technics.
Conscious of the fact that a green economy is also conducive to a better lifestyle for its
inhabitants, Malta is pushing forward initiatives in favour of the environment. These
include the generation of energy from alternative energy sources, including solar energy
and energy generation from waste, as well as resource management and reduction of
pollution. An innovative concept which is being promoted in this field is that of an
ecological island, whereby Malta’s sister island Gozo is gradually transformed into a
sustainable reality comprising environmental, social and economic issues. Being smaller
in size and more rural in its nature, Gozo offers the implement such a concept with
greater ease through such projects as agri-tourism and reducing the dependancy on
polluting energy sources.
The Business environment
Malta offers a highly competitive investment location for niche manufacturing,
particularly in the following industries; medical, bio-tech, pharmaceutical, automotive,
film, maritime activities, contact centres, aviation services, e-business and iGaming, back
office services, electronics and software. Companies setting up in Malta today include
software developers, financial services, iGaming, aviation, pharmaceutical companies or
manufacturers of high value electronic components and R&D particularly in the medical,
bio-tech and pharmaceutical industries.
An HR rich location offering a multi-lingual, innovative and highly-qualified workforce,
Malta knows that its people are its most valuable resource. Indeed, the authorities
remain committed to retraining the entire workforce to take on specialist
manufacturing and other industry jobs, while the University of Malta, vocational
colleges and other specialist academies ensure a steady stream of top level, highly
motivated graduates. With labour costs in Malta still well below the European average,
the high productivity, dependability and performance of the workforce are considered
the island’s greatest strength.
Malta’s geographic position in the centre of the Mediterranean makes the island a key
player in the global warehousing and logistics chain. The Malta Freeport, the third
largest transhipment and logistics centre in the Mediterranean handling 2.3million TEUs
per annum and run by CMA CGM, is connected to 50 Mediterranean ports and 100 ports
worldwide, while the Port of Valletta is serviced by many of the world’s major shipping
lines. Within close proximity of both Ports, the Malta International Airport ensures
multimodal freight services and distribution are easily manageable. MIA offers both
passenger and cargo services to key destinations in Europe and North Africa through
regular daily flights.
The island offers investors a comprehensive package of incentives under the Business
Promotion Act and the new Malta Enterprise Act. Incentives include soft loans,
investment allowances, training grants, tax incentives and the provision of ready built
specialised factory space. New provisions provide incentives for those industries
demonstrating growth and employment potential that are engaged in manufacture,
repair, improvement or maintenance activities, and there are specific incentives aimed
at encouraging activities in the growth-targeted pharmaceutical, plastics, biotechnology,
electronics, electrical equipment and IT enabled service sectors.
Malta’s infrastructure is of a world standard and can cater to all investors’
requirements. At the same time, living in Malta offers an excellent lifestyle in a glorious
Mediterranean climate, the island is politically stable and within a few hours flying time
of most major European cities. These combined advantages make Malta one of the most
attractive investment locations in the region, and international attention is fast being
drawn to the island and its potential.
The Bottom Line
Malta offers foreign investors the security and ease of operating within EU borders yet
within easy reach of the emerging markets of North Africa and the Middle East,
supported by top class legislative framework, a stable political and economic
environment, and a cost-effective, driven workforce. For foreigners working in Malta,
the combination of an efficient business climate and excellent infrastructure enhanced
by the relaxed holiday environment in which they operate offer a unique and magical
opportunity to do business successfully.
For those looking to contract or outsource their requirements, Malta could be the
location for a range of manufactured products and services. Moreover, Malta
Enterprise, the national agency for trade, investment and enterprise support,
(www.maltaenterprise.com) can assist you with contacts, leads and insight on doing
business with Malta for trading, joint ventures, franchising, technology transfer,
strategic alliances etc.
