Malta remains attractive for FDI, EY survey finds
Christian Keszthelyi reports on the results of the EY Attractiveness Survey, Malta, October 2018.
Nov 5, 2018
Malta keeps retaining its attractiveness for foreign direct investment (FDI) in the region, which is chiefly fuelled by a welcoming and progressive regulatory environment and a strong iGaming sector.
Despite still being in their infancy, blockchain and distributed ledger technologies are already at the forefront of investors’s thoughts, with an expectation that the related markets will boom soon. EY’s annual Attractiveness Survey 2018 for Malta paints a promising picture of the tiny archipelago.
For such a tiny island — Malta has recently been cast in the international spotlight for a quickly developing economy that magnetises labour from the European Union. The sentiment is clearly reflected in how international investors look at the island, as attractiveness for FDI has stayed steadily high for the past few years.
One of the mostly-praised factors is inevitably the regulatory environment, the EY survey finds. A stunning ratio of 83% of the 115 FDI companies and investors participating in the study, said keeping pace with regulatory changes makes the investment climate of Malta a pleasant one. The survey adds that recent regulatory developments for innovative technologies such as blockchain and DLT will also be key.
“Business investors increasingly believe that Malta is keeping pace with regulatory changes in competing jurisdictions while simultaneously providing investors with the potential to exploit competitive advantages in both European and global markets,” the survey says. The current environment offers an international advantage for the archipelago, according to 56% of the investors asked.
For such a healthily improving economy and industries, usually finding sufficient labour is the key. The EU-wide trend of labour-shortage indeed is visible in Malta, which is refrained by hearsay that the Maltese government is prone to attract more workforce from the EU28. However, despite cries about demand continuing to outstrip supply in terms of skilled labour — 64% of respondents mentioning difficulties in recruitment — investors believe that technology-wise the right skills are in place to keep up with advancements in 63%.
A strong iGaming sector
Being the first EU state to regulate the remote gaming industry in 2004, Malta has established itself as a significant iGaming hub in the region, with a well-earned global relevance. In the past one and a half decade, the sector has seen steady and continuous growth. According to NSO statistics in 2017, the sector contributed to Malta’s gross value added by 11.3%, generating an estimated EUR 1.1 billion+.
The growth is expected to linger on. In the next five years, the most important factor driving Maltese growth is believed to be iGaming, according to 69% of the respondents. This is followed by the tourism and leisure sector, (48%), payments and fintech sector, (45%) and digital media and games sector (42%). Despite blockchain and DLT not having been included as a possible choice, when voting for the “other” option, some investors indicated that innovations related to DLT will play an important role in the next half a decade.
In terms of already adopted innovative technologies – cloud computing (55%), data analytics and big data (27%), mobile (24%), process automation (22%) and IOT with wearables (14%) lead the way. Blockchain and DLT technologies, furthermore, are already present in 5%, and investors expect this ratio to rise by 31% points in the next three years.
Living in a truly transformative age, Malta needs to act quickly and rationally to changes, with a special focus on the areas in which its competence will stand out against strong international competition, while not turning a blind eye to the fact that skill shortages remain a serious issue. “Positioning the island at the forefront of innovation, while remaining true to the principles and values that the country has grown accustomed to will be even more relevant going forward than ever before,” the survey concludes.
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