The evolution of FDI in Malta – 20 years on

While maintaining a robust local business and trading presence, foreign direct investment (FDI) has long been a pivotal element in Malta's economic progression.

In the last two decades, Malta has deliberately drawn significant FDI, leveraging its strategic Mediterranean position, EU membership, skilled labor force and tax regime. EY’s Malta Attractiveness Survey (MAS) has provided a platform to engage with FDI stakeholders in Malta for twenty years, offering insights into their reasons for investing in Malta and their aspirations for enhancements.

Malta's prime location, bridging Europe and North Africa, positions it as an ideal nexus for companies in logistics, distribution, and manufacturing aiming to penetrate both markets. The country's EU accession in 2004 fortified its appeal, instilling confidence in investors and granting unfettered access to the EU’s Single Market. This has been a compelling lure for foreign enterprises, fostering investment on Maltese soil over the two decades of EU membership.

Moreover, Malta's tax regime, featuring some of the EU's most competitive corporate tax rates, has consistently attracted FDI, particularly in finance, gaming, and maritime industries. The MAS has repeatedly highlighted this tax framework as a primary incentive for investors.

The local workforce's affordability and proficiency, coupled with the widespread use of English, have made Malta an attractive destination for FDI, a fact that policymakers have capitalized on in promoting the country. The MAS also underscores Malta's regulatory and social environment as key factors in attracting investment.

In the past twenty years, Malta has pursued economic diversification, shifting from traditonal industries to embracing sectors like financial services, online gaming, pharmaceuticals, ICT, and aviation services. This diversification has broadened the FDI landscape, reflected in the evolving demographics of MAS respondents.

Infrastructure developments, including the expansion of Malta Freeport, upgrades to Malta International Airport, and enhancements in digital networks, have bolstered FDI. Nonetheless, recent MAS surveys indicate pressing infrastructure challenges, with investors calling for comprehensive improvements.

As we mark 20 years of MAS and EU membership, Malta's FDI strategy must address critical areas to foster sustainable growth and adapt to the global economic shifts. The nation's responsiveness to global trends, technological progress, and geopolitical dynamics will be crucial in securing and retaining investment. With other regions offering competitive incentives, Malta must continue to innovate and build upon its FDI successes of the past two decades.

Join us at the EY Future Realised Malta 2024 conference, 'Envisioning Tomorrow, Today,' on 23rd October to commemorate two decades of EY’s FDI research and to project the next 20 years. We will delve into the findings of EY’s 20th edition of the Malta Attractiveness Survey whose results will be published during the event. In addition to understanding this year’s results and how trends have changed compared to prior surveys , we will also chart Malta’s trajectory in a series of informative sessions across five pivotal dimensions: build, share, engage, generate, and change.

Simon Barberi is a Director at EY Malta, leading its EU Advisory services and Attractiveness Programme initiative.