Well-known traditionally as a Mediterranean tourist destination, the tiny island-nation of Malta is today increasingly being circled on the maps of international investors as a place of special interest, just as it has been for decades by European holidaymakers.
While Malta’s economy may be small, it’s currently one of the world’s fastest-growing, having weathered recent global economic disruption remarkably well, owing to a diversification strategy that has established several strong export-driven sectors.
Significantly, it has in recent times also become a growing financial services hub and a welcoming home to innovative industries such as blockchain and iGaming, with businesses attracted on the back of forward-thinking legislation, made by a government eager to embrace digital disruption.
It is this fertile environment, alongside the island’s favourable tax incentives and geostrategic location between mainland Europe and Africa, that has seen Malta become a new darling of the international investment community – with investment growth this year due to pick up even further, as large-scale infrastructure projects in the health, tourism and real estate sectors get underway.
Tasked with promoting these promising opportunities to foreign investors is the country’s economic development agency, Malta Enterprise (ME).
A Bespoke Approach to Investments
“There are some advantages that are overriding: you have the stability, the industry, the social and the political stability in Malta, and we also have a very strong and reliable workforce with very good skills.” Chief Advisor of Malta Enterprise, Mario Galea. Copyright: South EU Summit.
“For every sector there is a competitive advantage”, says Mario Galea, Chief Advisor of ME, which also acts as an adviser to the government on economic policy due to its close and constant interaction with the main economic players in the country.
“There are some advantages that are overriding: you have the stability, the industry, the social and the political stability in Malta, and we also have a very strong and reliable workforce with very good skills.”
The organisation, which coordinates various initiatives to advocate the islands’ economic growth attractiveness, today operates in various countries around the globe, with offices or representation in embassies and consulates in North Africa, the Middle East, Asia, the United States and Australia.
And while the country’s recent economic success story has meant that it has experienced an upsurge of interested parties knocking on its door, it competes in a very crowded European marketplace to bring foreign capital to its shores. As a result, Malta leverages on its small size to offer a very personal, tailored approach as part of a “microtargeting” strategy, which not only allows the investor to determine if Malta is right for them, but also if the investor is right for Malta.
“Our strategy is flexible”, explains Galea. “We do a lot of research, then we target specific companies and we approach them with a specific proposal. So, if we know that they are looking at expanding in Africa, our proposal would be related to Malta being a bridge to Africa.”
Though Malta is able to present this bespoke, pro-business method very effectively, it must also compete for investors, in spite of its small size – with space for new operations on the island at a premium. Careful planning and cooperation is therefore key.
To this end, ME works closely with Malta Industrial Parks Ltd – the company responsible for allocating and developing industrial spaces on the island – as well as the Planning Authority and other relevant ministries, to ensure that new investors not only have everything they need to establish themselves, but most importantly, also have the conditions required to grow. This reflects ME’s policy that the long-term presence of an investor in the country must be a priority.
“Some of the foreign direct investment that was attracted to Malta in the 1960s, they are still operating here, and that is a very good testimony for us because it shows that the whole country can deliver an environment – an eco-system – that helps companies to be profitable”, says the Chief Advisor.
“The manufacturing sector is the most stable sector that we have in Malta because it is the least volatile. If you take the leading companies that we have in Malta, most of them have been here for a long time. That shows the stability that manufacturing gives to the economy.”
Malta can become “the front-runner in Europe” in medical cannabis. Copyright: South EU Summit.
Besides fostering the growth of traditional industries such as manufacturing – which contributes an estimated 25 percent to the Maltese economy – a major focus of the government over the past decade has been to nurture the development of newer, more niche markets. Again, this is where Malta’s size has played a part in its economic strategy.
On the one hand, attracting digitally-driven sectors such as Fintech and iGaming has been preferable as they are generally more space and resource efficient. On the other hand, the island’s compact, flexible nature also means it has made for a perfect fit – with the government able to foster an ecosystem for nascent industries much quicker compared to larger European competitors – allowing Malta to create both the conditions and the legislation necessary for innovative industries to thrive.
One of the more specialised areas that the island is now pursuing, for instance, is that of medical cannabis – an industry in which ME believes Malta can become “the front-runner in Europe”.
“The aim of this sector is more to have a research and scientific-development base”, explains Galea. “We are not very much interested in cultivation. We have calculated that when the companies will be fully operational it will possibly increase our exports by about one-third. We are talking about a substantial amount of contribution to our GDP.”
“We want to build a cluster where we have production, we have research, we have intellectual property, and we have development of new strains. We believe that there will be a significant and exponential growth for medical cannabis in the very near future.” Chief Advisor of Malta Enterprise, Mario Galea. Copyright: South EU Summit.
Malta’s first step in this process was to introduce specific legislation to allow the production of medical cannabis before starting to promote the sector to investors – which is naturally where ME came in – to a point where there are now fifteen approved projects, involving some of the world’s leading companies in this niche segment.
“But obviously we are not going to stop there. We want to build a cluster where we have production, we have research, we have intellectual property, and we have development of new strains. We believe that there will be a significant and exponential growth for medical cannabis in the very near future.”
While this very future-facing strategy may be symbolic of Malta’s modern economic development and trade promotion – a part of ME’s remit which the Chief Advisor admits can be “risky” due to the inherently “volatile” nature of new technologies and markets – it is a calculated gamble that must therefore be offset by ensuring Malta also “keeps what we [already] have”.
A Micro-Industry with Macro-Opportunities
“It is very important to support the small business because the more they grow, the more services they give to the Maltese population, which is obviously increasing.” Copyright: South EU Summit.
As well as supporting existing large business, ME has a responsibility to support domestic, grassroots business too, helping boost the growth of small and medium-sized enterprises (SMEs); acting as an incubator for the island’s start-up ecosystem.
“Start-ups are very important for us”, says Galea. “We have incentives basically from the creation of an idea until the business can grow and expand.”
This includes grants of anywhere from five thousand euros for small start-ups, to up to as much as thirty million euros for a larger business. However, it is the micro-industry which requires the most care and attention, in addition to any financial support.
“We attach a lot of importance to the micro industry, not just the Maltese-owned, but also foreign businesses – and this is where we are very, very competitive”, emphasises Galea. “Because if a small company from the [United] States or from Canada goes to a large jurisdiction within Europe and proposes a business that would employ maybe twenty people, in a large territory that would be lost. For us that is important.”
“We will ensure that that company will get the same service as if it was a large company. It is very important to support the small business because the more they grow, the more services they give to the Maltese population, which is obviously increasing.”