Malta’s financial services sector, a key driver of the nation’s economy, must not fall victim to complacency, according to Shadow Minister for the Economy, Jerome Caruana Cilia.
In an interview with the Corporate Times, the PN spokesperson stressed the need for proactive measures to safeguard the sector’s long-term growth, in the fact of intensifying competition. He argues that while the industry has shown consistent resilience and steady expansion in recent years, there are pressing challenges that require urgent attention.
“The financial services sector is a crucial pillar of our economy, delivering high-quality jobs and creating significant spill-over effects across other industries,” he states.
“From legal firms to accountancy practices and other professional services, the positive impact of this sector is felt far beyond its immediate boundaries. It is a vibrant ecosystem that has provided substantial benefits to our economy.”
However, his warning is a stark one: “We must not make the mistake of thinking that this success is self-sustaining. Competition around us is getting fiercer.”
Caruana Cilia points to the increasing competition from small jurisdictions like Luxembourg, Estonia, and Cyprus, which are rapidly expanding their presence in the financial services industry. “These countries, particularly Luxembourg and Estonia, have made significant inroads in the FinTech sphere. Cyprus, traditionally dependent on Russian markets, has been re-shifting its focus to the continent and is a direct competitor in the Mediterranean region,” he explained.
“There’s a lot of talk about new niches and diversifying our offering, such as in aviation, which is positive, but we also need to make sure that we are protecting the fundamentals. If we do not address the critical issues facing the sector today, we risk undermining everything we’ve built over the years”.
“Let’s be honest here - I am all for pushing this industry. But ask accountants, lawyers on a trip abroad to promote the island’s jurisdiction: We are approaching a stage where our fiscal system cannot be used a key selling point. It therefore boils down to the issues I mentioned after - and there is a lot of work to be done there”.
Three key areas that require urgent attention to maintain Malta’s competitive edge: reputation, infrastructure and bureaucracy
Caruana Cilia identifies three key areas that require urgent attention to maintain Malta’s competitive edge: reputation, infrastructure and bureaucracy.
“Firstly, we must restore the country’s international reputation, which has taken a hit in recent years. Despite exiting the FATF grey list two years ago, Malta is still perceived as a high-risk jurisdiction by some countries, which is limiting our potential in attracting new business opportunities.”
“Secondly, our energy, transport, and healthcare systems are in urgent need of upgrades. Without addressing these infrastructure issues, we are not just risking the quality of life of our citizens but also the attractiveness of Malta as a jurisdiction for foreign businesses,” he warns.
“Thirdly, we need to address the increasing bureaucracy, which is stifling business at every level, including at the financial services regulator. A very common scenario: the MFSA rightly insists on the appointment of Non-Executive Directors for firms, and also the need for individuals holding key functions roles to be PQed.”
“This is a good governance measure. However, the approval process for these directors is taking a lot of time. This is not conducive to business. We need to streamline these procedures if we want to make Malta an attractive option for international firms.”
Despite these national-scale challenges, the Shadow Minister commends initiatives by the Malta Financial Services Advisory Council and FinanceMalta, who are working to devise a strategic plan for the financial services sector.
“The strategy being developed is ambitious, and it is great to see some of our brightest minds contributing to this effort. This is what the Opposition pushes for across all levels. However, I am concerned about the lack of momentum in implementing these plans. What we need is clear political direction to push these initiatives forward. Without strong leadership, even the best-laid plans can falter.”
Malta has the potential to continue being a leader in financial services, but this requires a commitment to addressing our current challenges and laying the groundwork for sustainable future growth, he concludes.
“Let’s make sure that we are not just protecting our past successes but also building a brighter future for this sector and for our country.”
Hon Jerome Caruana Cilia will be addressing next week’s Annual Conference organised by FinanceMalta