Malta continues to experience consistent economic growth, outpacing its European peers despite global uncertainties, says George Vella, chairperson of FinanceMalta. In this interview, he highlights the country’s success in attracting foreign direct investment and explains how embracing innovative financing mechanisms and targeted infrastructure investments could help Malta evolve and reach new heights.

Malta’s steady rise as an economic powerhouse in Europe, underpinned by robust foreign direct investment, has been remarkable but this progress, according to Vella, was not accidental but the outcome of deliberate positioning and smart economic strategies.

“Malta’s approach to growth has often been likened to a small business reinvesting its own savings. We achieved sustained progress without relying on complex financial mechanisms or significant external debt.”

In 2023 alone, FDI flows to Malta amounted to €9.9 billion by mid-year, with financial services accounting for nearly 97.6% of the nation’s total FDI stock, valued at €477.9 billion​.​

“Much of this investment comes from international firms drawn to Malta’s favourable business climate, particularly in financial services, gaming, and technology. This influx of foreign interest has bolstered Malta’s image as a respected, competitive hub in the EU, creating thousands of high-value jobs and fostering innovation.”

Vella acknowledges that Malta’s fast-paced growth has not been without challenges.

“Our infrastructure has at times struggled to keep up with the demands of rapid expansion and these concerns have been shared by both the public as well as by investors.”

Malta’s infrastructure could benefit greatly from mechanisms like private equity, sustainable finance instruments and project financing

“This mismatch has led to a few doubts about Malta’s resilience and long-term stability, but we saw this as an opportunity for innovation. Today, if we look at Malta’s broader context, there’s significant potential for further development,” he added.

According to Vella, one of the keys to unlocking this potential lies in diversifying the country’s financial ecosystem.

“Malta has traditionally taken a conservative approach to financing, opting to build a strong foundation before venturing into more sophisticated tools. But now, I believe that exploring advanced financing options could be pivotal for Malta’s next stage of growth.

“Imagine a small family-run business that has grown steadily using its own resources. At some point, they may need to seek outside investment to reach a new level. Malta is at that juncture now.”

He explained that Malta’s infrastructure could benefit greatly from mechanisms like private equity, sustainable finance instruments and project financing, particularly in sectors like renewable energy, affordable housing, healthcare, and transport.

“These areas represent not only critical needs but also opportunities for transformative growth. A shift to a sustainable energy model, for instance, would enhance our energy security, lower emissions, and attract green investments. This is where FinanceMalta’s ongoing work in promoting innovative financing can make a real impact, helping mobilize capital for ambitious projects.”

Vella believes that at this point, Malta should seek to elevate its position by developing infrastructure that supports the economy’s resilience while enhancing quality of life. He mentions the upgrade of healthcare facilities, improvement of transportation networks and the expansion of key facilities like the airport and freeport.

“The island’s financial sector plays a vital role in supporting these plans and our financial sector is robust and adaptable. This explains FinanceMalta’s efforts to introduce more innovative financing solutions such as private equity and venture capital because these can help create a solid foundation for Malta’s long-term growth.”

Despite the challenges, Vella remains confident in Malta’s ability to reach new heights.

“With our strong regulatory framework, excellent connectivity, and a multilingual workforce, we have all the ingredients needed to take Malta to the next level,” he asserts.

However, he emphasizes that this journey may require a shift in how Malta approaches growth and investment and that in the future, the island will not only sustain its economic momentum but also become a model of resilience and innovation in Europe.

“Malta’s untapped potential can be realized with a collective effort from stakeholders across the board. By combining our strengths with targeted investments and the right financial tools, we will be well-equipped to embrace this opportunity.”

“Malta’s future is indeed bright, and with the right approach, we can achieve progress that’s both sustainable and immensely worthwhile.”

“This is the forward-thinking approach championed by FinanceMalta. It is a vision that holds all the potential to propel our country into the global spotlight as an influential economic player in its own right.”

This interview was first published in The Corporate Times