The results of the Malta Attractiveness Survey of 2021 bring the spotlight once more on the issue of competitiveness. The main result is that Malta’s attractiveness as a location for investment has declined significantly from 62 per cent to 37 per cent.
Let us put things into perspective to make sure we understand the significance of these two numbers. We can add a third number. In 2016, 87 per cent of respondents interviewed in EY’s Malta Attractiveness Survey considered Malta as an attractive location to operate in.
The first point to be made is that the survey is conducted among foreign investors located in Malta. As such, these views have nothing to do with what foreign and local media say or with what politicians say. These people are experiencing Malta first-hand and know what is working and what is not in this country. Having dealt with foreign investors, I know that they could not care tuppence as to what the media and the politicians say if their direct experience is a positive one.
Another point to appreciate is that the drop in Malta’s attractiveness did not go into a group of so-called ‘don’t know’s’. Those who believe that Malta is no longer attractive increased from 25 per cent to 46 per cent. So if those respondents that expressed an opinion are added together, the number of those who did not amounted to 13 per cent in 2020 and 17 per cent in 2021.
Yet another point to be made is that it is all too easy to blame this result on Malta’s greylisting by the FATF. I know the greylisting is the elephant in the room in any discussion on Malta’s attractiveness, but it would be very erroneous to think this is our only problem in terms of attractiveness and, therefore, competitiveness. The solutions to the attractiveness and competitiveness issue are not just about getting Malta off the grey list but are to be found also somewhere else.
Companies operating in Malta would love to stay here but have rung an alarm bell, which we need to listen to and understand
Maybe the question we should pose is what needs to be done for foreign-owned businesses operating in Malta, and with a very strong orientation towards exporting their goods and services, to recover and maintain their competitiveness. I am putting the question in this way because a country’s attractiveness as an investment location depends on how competitive the businesses operating in that country are, and that competitiveness is the result of a number of factors, one of which is the national macroeconomic and regulatory environment.
Since every cloud has a silver lining, one should also note that 77 per cent of those who answered the EY survey stated that they expect to be still operating in Malta in 10 years’ time. This does not mean that the results are conflicting. What it does mean is that companies operating in Malta would love to stay here but have rung an alarm bell, which we need to listen to and understand.
The problem of Malta’s attractiveness as an investment location is not just the responsibility of the key players entrusted with attracting foreign direct investment into the country. It is the responsibility of each and every public institution and of each and every one of us.
Malta’s economy has always thrived on foreign direct investment and I cannot see any other economic model for our country. So we all have a role to play to ensure that Malta is an attractive investment location.