We keep our attraction – Norman Aquilina
This year’s EY survey on Malta’s attractiveness among foreign direct investment (FDI) companies based here has clearly shown that there are three main concerns that are significantly influencing the attractiveness of Malta. Malta as a place of FDI: political and regulatory stability, cost competitiveness and FDI availability. skills.
Malta’s political and regulatory stability had already been highlighted as a primary area of concern in last year’s survey, with Malta’s greylisting certainly continuing to influence the sentiment of respondents this year.
FDI investors delivered a strong message about the need to pay the utmost attention to the value of Malta’s reputation and brand identity.
From the outset, it must be recognized that, even if a country is in an ideal position, offers the right infrastructure and is supported by the right facilities, resources and incentives to attract FDI investment, this is always be conditioned by the reputation that the country commands. The two go hand in hand.
Today, we repeatedly hear about the growing awareness of compliance and its implementation in various sectors, that everything is clearly essential. However, what we should ultimately aspire to is much more than being compliant.
We need a change of mindset with bolder and more ambitious aspirations and while, in the short term, restoring our reputation by getting off the gray list is a priority beyond that we must move from restoration to building and strengthening our reputation.
Just like in today’s corporate world, a brand represents what makes a business but, ultimately, its reputation defines what people remember. Therefore, rectifying any reputation concerns before starting a national branding effort is, of course, an essential precondition.
The identity of our national brand can be more complex and wide-ranging and, therefore, requires a well-thought-out strategy. We need to carefully review and, possibly, redefine our brand to ensure that Malta remains highly relevant and visible on the FDI investment radar.
To achieve and maintain a good reputation together with an attractive national brand, we also need to ensure that the authorities always put and empower the best minds in positions of influence, both in the administration and in the administration. public, institutional authority or regulatory responsibility. Similarly, with regard to the diplomatic representation of Malta or other forms of national representation.
Just as we all want our businesses to be run by the most skilled and productive managers in order to achieve our corporate goals, we should, in the same way, expect the same from all decision makers and policy makers.
In terms of cost-competitiveness, notably, but not exclusively, corporate taxation, labor costs and shipping costs are under increasing pressure.
Competitiveness is not just about costs but also about capabilities
Corporate taxation continued to rank highest in the attractiveness survey scoreboard, despite a significant decrease in respondents’ scores, compared to previous years. Of course, maintaining a competitive tax regime is important, even if this reduction is not necessarily negative. Indeed, it could also be an opportunity to better reallocate FDI investment considerations, without being overly dependent on corporate taxation, all the more so given the debate on reform. ongoing international tax.
The pressure on labor costs is particularly conditioned by the tight labor market, with the growing shift in workers’ attitudes from job security to job mobility further complicating matters.
With regard to transport and logistics, this was considered significantly unattractive by many of the survey respondents. Evidently this is becoming a growing issue, all the more so given the prevailing inflationary pressures, which include exorbitant increases in shipping costs.
Such transport and logistics costs are already having an increasingly significant impact on our manufacturing competitiveness, bearing in mind that the costs of our insularity will always be higher when operating from an island economy without raw materials nor a sizable domestic market.
Despite these growing cost pressures, it is important for us to fully recognize that competitiveness is not just about costs but also about capabilities.
As reflected by most survey respondents, skills shortages in Malta remain a recurring issue that is conditioning our economic expansion due to our inability to meet growing demand. for specialized skills.
In addition, if we really want to put Malta firmly on the map of international investment, we need to continually promote a stronger entrepreneurial culture in an environment that fully responds to the need to maintain our competitiveness. , which, after all, is a prerequisite for a sustainable economy.
Here, despite the growing sensitivity about environmental responsibility, it is somewhat conflicting to note that survey respondents have put a “shift to a low-carbon economy” at the bottom of their priorities to remain globally competitive.
This may indicate that while investors recognize their responsibility for climate change and that they operate in an environmentally sustainable way, it may also indicate that they feel that investing here can condition, if not hinder, investment. altogether, their competitiveness.
Achieving the right combination to ensure sustainable competitiveness is a necessary but delicate balancing act. Both sustainability and competitiveness are interdependent and intrinsically linked.
Going forward, there is a need to look for ways to better guide and support the transition to business to meet the established sustainability goals.
To conclude, the changes, or, rather, the deterioration, within Malta’s attractiveness scoreboard, as seen by current FDI investors, should be carefully noted and acted upon. We just can’t afford to ignore the message being conveyed here. Definitely deserves a tough and objective review.
Let us, of course, keep in mind that Malta still offers several positive considerations, but we must always strive to continue to improve the value proposition to attract additional investment.
Considerable work remains to be done to effectively address and reverse the negative trend within the sentiment expressed by FDI investors. However, much of this can be achieved, as long as we start by acknowledging that this requires a determined effort.
Norman Aquilina, Group Chief Executive, Simonds Farsons Cisk plc
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