A multi-million investment in STMicroelectronics is one of the key measures that will lead Malta to develop more sustainable economic niches, according to Finance Minister Clyde Caruana.
The investment, believed to be in excess of €20m will see the company upgrade their capabilities in manufacturing semiconductors and is intended to have several spillover effects within the research and development industry.
The project was announced earlier this year, following the European Commission’s approval of the state aid package being allocated to the company.
Caruana said in the Budget speech that the investment represents one of the government’s key investments in its attempt to develop new economic niches which will add value to the economy.
These niches, Caruana said, would bring about “high-quality jobs” that would grow Malta’s economy “with the least possible impact on the environment and quality of life”.
Fabless manufacturing
Caruana also announced that Malta Enterprise will be developing a centre of excellence in the field of semiconductors, focusing on developing workers’ skills and supporting startups and SMEs to invest in this sector.
The centre will also aim to attract foreign investment, particularly from companies from the fabless manufacturing sector.
Fabless manufacturers design and sell microchips but outsource the actual manufacturing of the chips to other, often cheaper, markets.
Investments in aviation, manufacturing, maritime sector
Caruana also announced plans for new parking facilities for aircraft over the coming years, describing it as an additional investment in the aviation industry, following the inauguration of a new taxiway increasing the airport’s maintenance capabilities earlier this year.
The government will also be working to introduce legislative structures which will enable aircraft leasing to take place in Malta. New investment in this sector will be in place by the end of next year, Caruana said.
The manufacturing industry will also receive a boost, according to Caruana, with INDIS set to announce several foreign investment projects in different localities over the coming years. Details of these projects are scant at the moment.
Meanwhile, a complex for small and medium-sized enterprises will be unveiled in Ħal Far. This will provide these companies with a space from which to operate away from residential areas.
Caruana also pointed to Malta Enterprise's work on the Blue Med initiative, which aims to help businesses invest in Malta’s maritime sector, as an area that can be further developed. Economic studies about the sector and its potential are still underway, Caruana said.
€40 million cash grants for SMEs
Caruana also announced a total of €40 million in cash grants to small and medium-sized enterprises (SMEs) under the Business Enhance scheme. These grants are aimed at helping startups develop, diversify and reach new markets.
Financial services
Caruana said that the Financial Services strategy launched earlier this year is set to transform the industry and pave the way for several new initiatives over the coming 18 months.
These include regulatory changes to Malta’s fund and wealth management sector which will incentivise foreign investment specialising in private equity.
Prior warnings
Earlier this year, Caruana had warned that Malta’s population is set to balloon to 800,000 unless its economic model is revamped. Earlier still, he said that Malta’s economy has to move away from its dependence on construction and imported workers.
Several social partners have echoed Caruana’s warnings, with the Malta Chamber proposing a cap on foreign workers in their pre-budget proposals.
Despite these warnings, the government’s intended direction in creating new economic sectors within the economy has remained unclear to date.