The fastest-growing industries in Malta

Recent years in Malta have been characterised by high levels of growth and a rapidly expanding private sector, with key industries including online gambling, financial services, and digital marketing. The rise of these sectors can be attributed to various factors including favourable tax and legislative environments and an increasingly diverse workforce. In this article, we examine some of these in more detail, and explain how Malta’s unique professional landscape has yielded such positive results.

Information Technology

The Information Technology (IT) sector has seen rapid growth in recent years, with the industry now representing on average 6% of the Gross Added Value (GVA) — a key metric of economic productivity as contributed by a particular sector — to Malta’s economy. This can be mainly attributed to the country’s investment in burgeoning fields including cyber-security and Artificial Intelligence (AI), as well as investment from outside Malta attributable, at least in part, to factors including its multilingual population, location between Europe and Africa and the Middle East, and its small size making it an ideal location to test the feasibility of new products and services. The introduction of a new government entity, the Malta Information Technology Agency (MITA), in particular, has proved critical in assisting businesses operating in this field.

Digital and Online Marketing 

As another online industry, this has benefitted from factors common to the rise of the country’s IT sector. However, other factors have also played a significant role, with Malta’s adoption of digital marketing as a means to support growth being an important one. According to the Malta Communications Authority (MCA), a recent study by Eurostat found Malta to rank amongst the top countries in the European Union to employ digital marketing in advertising by SMEs (small and medium-sized enterprises), with 46% of such companies using the internet for advertising and 71% utilising social media for the purposes of promotion.

The work of the MCA has been critical to this growth, with its remit including the promotion and safeguarding of sustainable competition in the sector, as well as fostering an environment favourable to innovation and further investment. Another factor for this growth is due to several businesses making use of SEO (search engine optimisation) techniques to help their website rank high on Google. Some of these SEO methods would include the use of a link building tool to help grow businesses’ sites by acquiring backlinks, keyword research and targeting to aim for phrases that are commonly searched for on Google, optimising site loading time, and many others.

Financial Services 

Malta has long been known for its favourable tax environment, with foreign-owned companies currently paying a rate of 5–10%, once reductions and refunds have been taken into account. This has attracted significant investment, with Malta’s financial services industry accounting for 11% of the country’s GDP and holding the title as the country’s fastest-growing sector. In 2021, the value of financial services to the country’s economy grew by 4%, this following an increase of over 5% in 2020. The key to Malta’s value in the industry has also been determined by both domestic and international factors, as well as by the growth of auxiliary local industries including aviation and maritime services. 

International events such as Brexit have made Malta increasingly favourable to investors, with significant interest now originating from the UK, USA, Germany, Austria, and Switzerland. According to the US’ International Trade Administration, as of June 2020, Malta was home to 566 investment funds, with 63 of these represented by Alternative Investment Funds (AIFs) — a subset of funds that has found furtive ground in Malta due to its relevance to both EU and non-EU-based funds seeking to operate across the bloc, and the active engagement of the Malta Financial Services Authority (MFSA).

Malta’s embracing of Blockchain, cryptocurrency and FinTech has also proved vital, highlighted by such measures as the 2018 passing of the Malta Digital Innovation Authority Act (MDIA Act), Virtual Financial Assets Act (VFAA) and the Innovative Technology Arrangements and Services Act (ITAS Act). The country has also, notably, already worked to set up cryptocurrency exchanges, securing access to further growth in this new field. 

Tourism 

Tourism has always played an important role in Malta’s economy due to its favourable weather, ease of access and widespread use of English as a joint primary language. Over the last twenty years, however, the sector has nonetheless witnessed enhanced growth, with visitors to Malta rising year-on-year since 2015, a picture that is mirrored more generally (albeit with some slight deviation) since 1995. In the mid-1990s, tourism accounted for approximately 20% of GDP. While this has decreased over time, this is in large part attributable more to the growth of other key sectors of the economy rather than a decline in tourism. Indeed, revenues in 1995 stood at just over 800 million USD; in 2021 this had risen to over 2 billion USD. While the COVID-19 pandemic caused enormous short-term damage to the industry, the Maltese government’s Tourism Strategy 2021–30, entitled “Recover, Rethink, Revitalise”, seeks to address this and make the country’s tourism sector less vulnerable to further disruption. Additionally, it is worth noting the diverse nature of the sector, with the country’s English language schools also contributing significantly to its success in addition to holidaymakers. 

iGaming 

The rise of iGaming in the country may be seen in some ways as a combination of all of the above. Certainly, tax incentives have proven immensely attractive to iGaming companies looking to set up in the EU, with the country’s embracing of new technologies, low-cost working environment, multilingual population and inviting climate also playing a significant part. It is, however, mainly due to the work of the Malta Gaming Authority (MGA) that the country is seen as such a powerhouse for online gaming. Seen as one of the most trusted and comprehensive governing bodies for distributing licenses — a key factor in establishing so-called ‘Regulated Markets’ — the MGA now enjoys a global reputation. As seen in other areas of economic activity including financial services, Malta’s rapid adoption of new industries, and the supporting logistical and legal framework needed to support them, has been vital in promoting the growth of iGaming activity in the country; in 2004, Malta made headlines as the first EU member state to adopt a set of online gambling regulations, with its introduction of the Remote Gaming Regulations. 

Final thoughts

As we can see, despite the country’s small size and population, it continues to perform well in many key areas of emergent economic growth, supporting both new and established industries with favourable tax incentives, an inviting local environment and regulatory frameworks demonstrating foresight and an interest in long-term growth. While the individual challenges of each of the industries discussed above may vary in scope and nature, Malta seems poised to continue its rapid economic growth now and into the future.