Can Malta reframe its future during the uncertainty of today?

Theo Dix is a senior manager at EY-Parthenon, a strategy consultancy that helps clients architect and deliver strategy across their organisation

The world is walking on a tight rope, balancing health challenges from the pandemic, new economic realities as a result of strict containment measures and the devasting effects of school closures for children. Policy leaders appear to be caught in the crosshairs with no end in sight, as the number of cases around Europe skyrockets and a flu season looms.

The IMF issued its 2020 Global Financial Stability Report last week. In its words “this is the worst crisis since the Great Depression, and it will take significant innovation on the policy front, at both the national and international levels to recover from this calamity. The challenges are daunting.” The report highlights that “Small states as well as tourism-dependent and commodities-based economies are in a particularly difficult spot. Most economies will experience lasting damage to supply potential, reflecting scars from the deep recession this year and the need for structural change.”

These comments highlight how daunting the next 6-12 months may be for Malta, with 30% of the economy estimated to be directly or indirectly linked to tourism. As always however, we need to seek out opportunities in adversity. Despite the many challenges COVID-19 has brought with it, the island may be more connected – digitally – than ever before. The pandemic has also shown us the importance of not only investing in physical infrastructure but also in health and education.

While many industries across the globe are struggling, technology companies are thriving, with many embarking on extensive recruitment campaigns to support the huge upsurge in demand for their products and services. Could this be an indicator as to where Malta should focus more looking forward?

For the last 16 years, EY has carried out an annual perception survey amongst senior leaders from foreign owned businesses present on the island. The survey examines Malta’s strengths, its weakness and where the country should focus as it looks forward. The investors also give their views on whether Malta is an attractive country to establish or maintain operations and whether their companies will maintain their presence in the country over the coming decade.

Malta’s corporate tax regime has always been a key selling point. Yet in a post-COVID-19 world, this cannot be our only trump card. Malta’s innovation environment usually ranks as one of the least attractive parameters and although investors regard Malta’s talent pool highly, a shortage of specialised skills has hampered growth plans for several years.  highlight these points because it may shine some light on where Malta needs to focus. Much attention over the years has been given to bringing companies and workers to the country. Yet given our limited size, should there be more emphasis on creating the right ecosystem for Maltese to start and scale companies globally? And when successful the right tax structures to encourage them reinvest back into Maltese start-ups when they exit? This would require a shift in mindset, one towards innovation, value-creation and a better acceptance of risk and failure.

Malta’s economic model has focused extensively on numbers across the last decade – rate of GDP growth, number of jobs created, tourists, permits, new roads and property sales. But given the seismic changes happening across the world, is it time for us to reflect and pivot towards a model that gives more focus to the quality of life, our environment and social fabric?

Next week EY is hosting Future Realised, a free virtual event, exploring what should Malta do now, next and beyond. Speakers from the World Bank, Financial Times, World Economic Forum, United Nations, the European Commission, Bocconi University and many more will join local business leaders and NGOs to examine how Malta can reframe its future during the uncertainty of today. The event will look at what a new industrial strategy for Malta might look like and the sectors and skills to drive growth, reimagining tourism, pivoting to tech and the opportunities brought about through nearshoring and a global virtual economy. The event will also see the unveiling of EY’s latest on whether Malta remains an attractive location for foreign investment; Malta’s Future Consumer landscape; and Generate – a survey setting out what drives our younger generations.

Discussions will take place across 4 x 90 mins CPE accredited sessions spread over four days between 20th – 23rd October. For more information and to book your free place visit www.ey.com/mt/futurerealised