Think South. Think Malta, the Southern European Success Story
In this feature report by the editorial team at di-ve Finance, we find out how the old stereotype implying that northern Europeans are necessarily more productive than their southern neighbors is not only wrong, but unfair, particularly in Malta’s case.
Malta, the island in the sun where time stood still and life is all about taking it easy. If that is your idea of Malta, think again, change your attitude and, even with your heavily-tinted sunglasses you will still feel the vibrancy, the go-getting attitude that Malta has achieved.
During the past 15 years Malta has become a thriving financial services center offering not just an enviable jurisdiction but also providing trail-blazing ways to always be a few steps ahead of anyone else. All this is definitely not characteristic of a lazy nation.
Maltese firms and professionals cannot be living life in their laid-back manner some people think Southern European folk indulge in at all times of the day, waking up at night to make merry. This idea of people of the south being lazy—and just lovers of life and fun—is merely embedded in folklore. Malta has proved this more than amply in these last years.
While the rest of the Euro-zone was experiencing upheavals and economic crises unheard of before, Malta kept its poise and remained buoyant and resilient. Others faltered and sputtered while Malta held high and remained a force to be reckoned with. Far from needing bailouts, Malta not only weathered the storm but led the way in economic growth and job creation. This was hardly pure luck: it was the result of the well-planned, well-oiled, well-structured approach Malta has been following, hardly the fruit of a lazy disposition.
Northern Europeans are often surprised at this tiny island state’s economic resilience, and are curious to find out what's behind its success. To begin with, perhaps owing to the fact that Malta is otherwise almost barren and lacking in mineral resources, the Maltese people are characteristically loyal, family oriented and very hard working. Amongst the many events in Malta’s colourful history, there are instances that attest and have helped shape the islanders’ character, like when Malta served as a bastion for Christianity on Europe’s southern flank during the 16th century's epic (and unsuccessful) invasion by the Turksish armada in what became known as 'the Great Siege of 1565'; and more recently, during the AXIS powers’ onslaught of the Second World War, when the island suffered some of the heaviest bombardments in Europe. Facing the might of the Italian and German air forces, the Maltese fought courageously alongside the British and the rest of the Commonwealth, sacrificing countless lives - in what turned out to be another local heroic act that played a significant role in the eventual liberation of the continent.
On the economic front, many experts maintain that it was Malta’s very prudent and conservative banking sector which most likely has helped steer the island from the crisis others suffered. Whilst leaving aside controversies like the recently launched (now revised) passport sales scheme, which saw a flurry of criticism and debate across the political field both locally and overseas, there is consensus that successive Maltese governments have seen that Malta’s deficit is kept below 3% of the GDP. This good management of national finances has led the EU to dismiss its official excessive deficit procedure against the island in 2012. Another confirmation of the island's positive direction came from the international credit agency Moody’s, which has upgraded Malta’s status for 2013 to stable, in view of its projected economic progress.
Sure, comparisons can be odious, but if we had to look at the situation in neighbouring Greece, Cyprus, Italy and Spain, we’ll see that a number of banks have run aground and consequently most economic sectors have been hard hit, with younger generations seeking employment overseas as their job markets at home run dry. The reverse is happening in Malta.
It is sad to see neighbouring countries facing hard times, and to this effect Malta has lived up to its name, and has contributed monetarily in all Euro-zone bail outs. There is a growing international consensus indicating that the island’s finance industry is not only commendable but also exemplary, as we see from the World Economic Forum's, Global Competitiveness Report (2012-13), which ranks Malta’s banking system amongst the top 15 in the world for its robustness. No mere task considering Malta only joined the EU in 2004. Comparatively, Foreign Direct Investment (FDI) in Malta continues to expand, from €5.7 billion in 2008 to €12.3 billion in 2012, a capital injection that has helped creating a strong demand for new, specialised jobs, a steady rise in real estate business and more confidence from local and international investors.
The various schemes and incentives which were introduced by successive business driven governments have attracted investment from various and diverse segments including financial services, e-gaming, educational services, information technology and aviation have paid well.
In manufacturing, for long seen as ‘the Cinderalla’ of the local business scenario, Malta has seen a major shift in investments from a low-end, labour intensive manufacturing operations, to a focus on low volume-high, quality sectors instead. In the past five years alone, Malta’s manufacturing sectors grew by 20%, attracting value added work to Malta in new, innovative sectors such as aircraft maintenance and pharmaceuticals, with Lufthansa Technik and Actavis, respectively, amongst others.
It all led to Malta having a higher rate of economic expansion than the European average, and one of the lowest rates of unemployment. At just over 6% unemployment Malta remains one of the best 4 performing EU states in employment figures.
Naturally, the sun and sea connection remains tied to Malta—yes, Malta enjoys a strong, historic maritime heritage. Notwithstanding being the smallest European country, Malta has the seventh largest ship register in the world and the biggest one in the Eurozone. Yes, those sun-glasses are needed to enjoy strolling or visiting Malta’s many historical sites. The island enjoys more than 300 days of sunshine a year and has a history that spans 7000 years with temples that far pre-date Egypt’s pyramids.
Malta enjoys overall stability – an overall better ‘Quality of Life’. The island is safer, enjoys a varied local and cosmopolitan culture, offers excellent entertaining resorts, and is relatively cheaper than most central or Northern European destinations. It comes as no surprise, that according to the International Living’s 2011 survey, held among 192 countries, Malta was ranked third for overall ‘Quality of Life’, and came first worldwide for Climate. Not bad for a Southern Eurozone state.
Malta is full of surprises—its size belies its resourcefulness and its history but is also a great advantage. In fact Malta is small enough that anything in the two major islands that make up the archipelago can be done within less than an hour. If that was not enough, the Malta International Airport offers daily links to all major European cities, most of which being of under 3 hours flight away. With 1.2 million tourists visits annually, compared to the 400,000 all-year-round residents, it's no wonder how international this little rock can look and feel.
The Maltese islands boast world-class healthcare facilities, a most efficient telecommunications and ICT infrastructure, a high level of education with English being the official business language and a most stable government. The two major political parties, whilst often at logger heads on cosmetic legal details, have been in near-perfect synchronicity about the importance of strengthening Malta’s budding financial services sector. All this and a very well-organized, respected and also very approachable financial regulator (the Malta Financial Services Authority) have made Malta not just a player in the world of finance but the envy of many other bigger players.
Investing in Malta makes sense. Malta loves its fun, but in the right amounts and at the right time and its main attribute is that it also works very hard. Malta makes good business sense, wherever you come from.