Ladies and Gentlemen,
It is with both pleasure and no small amount of optimism that I take this opportunity to address you today. Malta, along with the rest of Europe, is enjoying the fruits of an economic upswing. After a period during which economic growth was not as strong as it should have been, both in my country and the wider European economy into which Malta is increasingly deeply integrated, jobs are being created in large numbers and unemployment is falling, investment is rising and confidence among consumers and the business community is strong.
In Malta and Europe we are reaping the rewards of the European single market, of high quality human capital and of physical infrastructure that is without equal anywhere in the world.
Low inflation and low interest rates have created the sort of sustained stability that allows European businesses to invest at home and abroad, and attracts overseas firms to our territories. Europe's record as both a source of, and location for, Foreign Direct Investment illustrates well the successful globalisation of European firms and European economies.
As you saw in the brief film clip earlier, Malta is an outward-looking trading nation. It has always been thus, and this tradition continues today as we seize the opportunities of globalisation, attracting some of the world’s most innovative companies. At the macro level, the stock of Foreign Direct Investment has grown continuously over decades to become one of the highest in the world relative to GDP. Our patient long term approach to improving our business environment continues to pay dividends – in 2006 alone Malta attracted 41 investment projects in sectors such as ICT, aviation, pharmaceuticals and electronics.
We in Malta have worked hard over many years to achieve the successes that we enjoy today, and we continue to strive to make our business environment ever more conducive to profitable enterprise.
As members of the European Union for more than three years, we have already met the tough criteria for joining the euro area. This is indicative of my Government's determination to ensure that macroeconomic stability prevails now and into the future so that investors – both indigenous and foreign – can take advantage of the many opportunities that exist for successful business in Malta.
The European Central Bank and the European Commission last month confirmed that Malta has met all the criteria – including inflation, exchange rate stability, budget balances and interest rates – to ensure that in a little over six months, the European single currency will become the legal tender of Malta; on schedule and as planned by my Government. This will further reinforce our position at the heart of the European project and the European economy.
“The modern state has become too small to do the big things and too big to do the small things”. This comment made some years ago by an eminent academic has become conventional wisdom, in Europe at least. Those big things, such as managing national exchange rates or ensuring a level international competitive playing field, are best done at European Union level I believe. It is for this reason that I and my Government have always been strong advocates of a strong European Union and Malta’s participation therein.
But unlike many larger countries, my country, with its population of 400,000, can still successfully do the small things. We enjoy the benefits of nimbleness, enabling us rapidly to change operating conditions for business when conditions and trends elsewhere change.
Independent international evaluations bear this out. A majority of government services is available on line, and an e-Government benchmarking report by CapGemini (in 2006) placed Malta second among the European Union of 25 in terms of services’ sophistication and third in the terms of services availability. The World Economic Forum, in a report released in September 2006, ranked the Government of Malta as the second most successful government in the world in promoting the use of Information and Communications Technologies.
Government flexibility is an important advantage we can offer companies striving to maintain competitiveness because we can move swiftly to address businesses’ concerns as and when they arise. International business understands this well and it is no coincidence that multi-national firms invest disproportionately in small, nimbler states – almost all the countries with the highest level of foreign investment as a proportion of GDP are small.
Malta's flexibility was one of the reasons in securing our biggest ever single inward investment project. Dubai Internet City, which has grown to become a hugely successful Information and Communications Technology hub in the Persian Gulf, has decided to locate its first overseas facility in Malta, with a view to serving both the European and North African markets.
This is a very exciting project, and one which I am proud to say my Government has been instrumental in attracting to Malta. Its massive initial $300 million investment is aimed at replicating in the Mediterranean the enormous success it has achieved in the Gulf. In doing so, it will generate at least 5,600 jobs.
Dubai Internet City chose Malta over a shortlist of other locations not only because my country makes an ideal test bed for innovative technology solutions given our state-of-the-art telecommunications infrastructure, but because we also have a range of incentives that makes it additionally attractive to invest in the ICT industry, and other sectors too:
· Advantageous rates of income tax on company profits
· Low interest loan financing
· Training grants
· And competitive property rates.
We Maltese are an adaptable people. We have had to be. Located at a central point in the Mediterranean, our island has long been viewed as holding a key strategic position in the region – an enormous advantage for the pursuit of peaceful commercial endeavours, both for our firms and foreign firms who choose to locate in Malta. This was a key reason for Dubai Internet City, and so many other leading firms, to choose Malta as a location to service the region.
Another key reason for Malta's success is our education system and, in particular, our university system, which is under-going continual reappraisal to ensure that it is in tune with the needs of a modern economy. A stable, adaptable and multi-skilled workforce combine with our education system's ability to provide on-going up-skilling.
Our focused and tailored education system and a tradition of high quality manufacturing have also seen Malta become an increasingly important player in Europe in the manufacture of pharmaceuticals. We have carved out a niche in high-end production, where quality and flexibility are at a premium. We have played to our strengths. As a small economy we have encouraged quality over quantity among those firms operating in our country. A distinct advantage of locating in Malta is our practical, no-nonsense approach to regulation. Our patenting laws, which are particularly beneficial to manufacturers of generic drugs, illustrate this in the case of the pharmaceutical industry.
The requirements of the pharmaceutical and ICT sectors for reliable communications have contributed to the development of the island as a regional logistics hub. The Malta Freeport is a state-of-the-art facility, with rapid turn-around, 24-hours/7-days-a-week where large ocean-going vessels can supply smaller feeder vessels travelling directly to 55 regional ports in the Mediterranean and the Black Sea. In 2006, Malta Freeport handled 1.5 million TEUs and has expansion plans to take the number of TEUs to 1.8 million in 2007. Air connections are also excellent, with over forty airlines operating regular scheduled flights to and from Malta to 86 different destinations.
While English and Maltese are our official languages, Italian, French and Arabic are commonly spoken. Owing to our historical links and the exclusive use of English in our university system, full bi-lingualism is one of our strengths. This proficiency in English has proved attractive to many of the successful companies operating in Malta.
Financial expertise and widespread fluency in English have combined to attract an increasing number of foreign-owned institutions providing an expanding range of services including fund administration, global custody services and emerging market investment funds. Back office services to the English-speaking world can also be provided in Malta, and at lower cost than most other comparable locations.
A regulatory framework based on international best practice has been one reason for Malta's success in internationally-traded financial services. We have legislated to ensure compatibility with the rest of the European Union and put in place a single regulator responsible for all licensed financial services activity on the island. Malta was one of the first six countries in the world to reach an advanced accord on fiscal matters with the Organisation for Economic Co-operation and Development (OECD) and is actively involved with the same Organisation, the European Union and the Commonwealth in modelling global regulatory policy.
To conclude, I would like to mention one of my country's greatest attributes – its unrivalled quality of life. The possibility of having a satisfactory work-life balance is an important, if often under-estimated element investment decision. Malta's quality of life has been one of our secret weapons so to speak in attracting foreign firms to our island.
A warm and sunny Mediterranean climate, an excellent health service which is, according to the World Health Organisation second in the world in health levels and fifth in the world in overall health performance, and very low crime rates all make Malta an enviable place to live and work. You should come down and see us – you will see the great opportunities for successful business and have a pleasant experience into the bargain.
We look forward to welcoming you.