Insightful findings have emerged from EY Malta’s annual attractiveness survey, a comprehensive assessment of Malta’s appeal to foreign direct investment (FDI) based on the responses of 130 FDI companies operating on the island. The results are based on companies that were surveyed during the months of July and August 2023.
Key sectors to fuel Malta’s growth in the next five years
With 51 per cent of respondents targeting Europe as their primary market and 16 per cent looking toward North America, the survey highlights the optimism of investors regarding Malta’s future. In the coming half-decade, tourism and leisure, gaming and artificial intelligence are anticipated to be the links of sectors that will propel Malta’s growth.
Tourism, gaming and AI lead the way
Malta’s tourism and leisure continue to reign supreme, recording a remarkable seven per cent increase over the previous year, standing at an impressive 58 per cent, nearing pre-pandemic levels of 2019.
Gaming, an ever-growing and evolving industry, closely follows at 49 per cent, indicating its significant potential in shaping Malta’s economic landscape.
Artificial Intelligence is the third cornerstone, with a 45 per cent acknowledgment of its potential contribution to Malta’s growth. In the same tier, aviation, payments and FinTech share fourth place, each boasting 32 per cent of investor interest.
Challenges and risks on the horizon for Malta’s businesses
While Malta’s attractiveness to foreign businesses maintained a steady rating of 59 per cent compared to the previous year, it still lags behind the peak levels seen before the pandemic. Malta’s corporate tax policy emerged as the top feature attracting foreign businesses. International tax developments in the form of OECD and EU reforms were identified as the primary risk to the country’s appeal as a jurisdiction.
A second substantial concern is a challenge familiar to Malta’s iGaming sector – a skills shortage. In the third position, reputational concerns come into play, followed by considerations of cost competitiveness and banking challenges. These insights offer a comprehensive view of Malta’s current business landscape, shaping expectations for its economic growth in the coming years.
Unmatched by any other European or global hub
The iGaming sector has evolved into a substantial contributor to Malta’s GDP and government revenue, spurred by the adoption of the Remote Gaming Regulations in 2004.
Job seekers in the iGaming field are in high demand, making it an attractive industry for professionals to explore.
Responsible gambling is a key focus, setting limits and guidelines to ensure a secure gaming environment.
Risks impacting Malta’s FDI
The greatest risks facing Malta’s FDI attractiveness are international tax policy changes, with 61 per cent of respondents expressing concern for the next three years. Skills shortages, reputational concerns, cost competitiveness, and banking challenges also rank high as risks.
There is an increased emphasis on quality of life factors (rising from 11 per cent in 2022 to 24 per cent in 2023), while the perceived risk of logistics and supply chain challenges has decreased significantly (from 18 per cent in 2022 to just five per cent in 2023).
Malta’s taxation in 2024 Budget
During his Budget 2024 speech, Malta’s Finance Minister, Clyde Caruana, disclosed that Malta would uphold its existing taxation framework throughout 2024, asserting the continuity of the full imputation taxation system.
The government is making ongoing efforts to align measures and incentives, such as the Qualified Refundable Tax Credits scheme, with EU and OECD regulations.
Malta will not adopt the Pillar 2 rules set forth by the OECD in 2024, a move to stay abreast of global developments and exercise flexibility as necessary.
Success story shaped by a sound licensing framework
The jurisdiction is supported by progressive gaming regulations. The 2018 Gaming Act, replacing the Remote Gaming Regulations, simplified the legal framework for online and offline gambling, strengthening the Malta Gaming Authority’s (MGA) reputation as a savvy industry regulator.
Understanding Malta’s iGaming licensing
iGaming, encompassing activities like online gambling, sports betting and esports, requires businesses to secure MGA licences to operate within or from Malta. The licenses cover a range of activities, from casino games to peer-to-peer games like poker and bingo. Malta offers a variety of cost-effective licensing options for B2B and B2C operators, each tailored to specific iGaming activities.
Dominance as a global industry leader
As the iGaming industry approaches a trillion-dollar market by the decade’s end, Malta embraces competition in innovation in games, technology, user experiences and talent recruitment.
Investing in Malta offers multiple advantages, including its EU membership, multilingual workforce, safety and stability, extensive double taxation treaty network, and strategic location bridging Europe, North Africa and the Middle East.
Significance of the gaming industry in Malta
The EY survey highlights the gaming sector’s dynamic nature and its potential to create jobs, attract foreign investments and drive Malta’s economic prosperity. Combined with tourism, leisure, and artificial intelligence, the gaming industry is poised to be a key driver of Malta’s economic landscape.