Investor confidence in Malta surges to 79%, but skills shortages demand urgent attention

Investor confidence in Malta has staged a substantial rebound, according to the 21st edition of the EY Attractiveness Survey Malta.

The report, titled Future Realised, reveals a strong resurgence of positive sentiment, with 79% of respondents now viewing Malta as an attractive location for Foreign Direct Investment (FDI).

This marks an impressive increase from the 54% recorded in the previous year. A considerable majority of investors (67%) also say Malta is as, or more attractive, than other European locations.

Malta’s appeal is founded on several established strengths. The corporate tax regime remains the strongest attraction, rated positively by 78% of investors. The stability of the social climate also continues to drive positive sentiment, rated attractive by 70% of respondents.

Furthermore, confidence in the stability and transparency of the political, legal, and regulatory framework increased sharply.

This positive sentiment is underpinned by the easing of concerns related to two previously high-ranked risks: reputational concerns fell by 15 percentage points to 27%, and anxiety over global tax reform dropped for the second consecutive year to 48%.

While current confidence is high, the survey identifies emerging pressures that could impact Malta’s long-term attractiveness, focusing on operational capacity.

Skills shortages have been identified as the top risk, cited by 60% of investors as the greatest threat to FDI appeal over the next three years.

This challenge underscores the urgent need for a strategic focus on education and workforce development. The labour market remains exceptionally tight, with 67% of investors indicating they are unable to recruit the required specialised skills in the local market.

Cost competitiveness ranks as the third-highest risk, cited by 42% of investors. Although Malta offers clear cost advantages compared to other locations, particularly concerning taxes and energy, the pressure of growth may push operating cost advantages to narrow as demand for talent and services increases.

Additionally, infrastructure challenges pose a significant pressure point, with 31% citing physical national infrastructure as a main risk to FDI appeal. Investors recognise that Malta’s rapid growth puts pressure on transport, utilities, and social infrastructure systems.

The findings point towards a strategic recalibration, with investor sentiment shifting toward a model of “better and less” economic growth and output. This emphasis prioritises quality over quantity, encouraging investors to pivot toward higher-value activities and utilise automation to reduce dependency on labour.

The sectors seen as leading Malta’s long-term growth include established, high-value clusters: tourism and leisure (70%), gaming (58%), and payments and FinTech (48%).

Crucially, Artificial Intelligence (AI) has emerged as the single standout long-term bet, with one in four investors selecting it as the sector holding the greatest growth potential. 47% of investors believe AI will drive Malta's future growth, and 42% are considering investments in AI. However, the primary barrier to AI adoption is cited as the lack of specialised talent (43%).

To sustain global competitiveness, investors indicate that immediate focus must be placed on execution, emphasising talent depth and physical capacity.

Education and skills is the top priority for remaining globally competitive across the next decade. Investors strongly believe that overhauling Malta’s school system by shifting focus from rote learning to critical thinking, STEM, and entrepreneurship, is fundamental to long-term success, with 69% placing this in their top three priorities.

Infrastructure, transportation and planning ranks as the second highest priority. Eight out of ten investors (80%) identified enhancing infrastructure as fundamental to Malta’s success. The need for investment in physical capacity is pressing, as 43% of investors rated Malta’s current planning and preparedness for population growth in terms of infrastructure development as “inadequate”.

Near-term commitment remains strong, with 90% of companies planning to either maintain or expand their investment plans in Malta over the next 12 months.

Abela says government will prioritise human development and higher incomes

At a conference launching the survey, Prime Minister Robert Abela said the government’s three priorities going forward are to be among the top ten countries in human development, that household income exceeds the European average by 15%, and that life satisfaction in Malta ranks among the highest in Europe.

He said that Malta’s economy is now one-third larger than it was before the pandemic, while the number of jobseekers has fallen by a third.

“By adopting progressive economic policies, today we are in a much stronger position than countries that opted for short-term austerity,” he said.

Abela also said that Malta Vision 2050, a government strategy-setting exercise for the next 25 years, will be finalised and launched early 2026.