According to the latest report issued on 16th October 2018, the World Economic Forum’s Global Competitiveness Ranking places Malta in 36th place out of the 140 assessed countries. This not only confirms Malta’s spot among some of the best performing jurisdictions, but also means the country moved up one score from 37th place out of 137 countries analysed in 2017.
The new meaning of Competitiveness in the 4th Industrial Revolution
With the advent of the 4th Industrial Revolution (4IR), humanity has entered a new phase characterized by rapid technology changes, political polarization and fragile economic recovery. This implies that new factors now drive productivity and growth along with traditional ones. The aforementioned elements have been identified and analysed by the World Economic Forum and have been identified in human capital, innovation, resilience and agility. In the 4th Industrial Revolution era, Competitiveness is defined by a set of factors, policies and institutions whose degree of development reflect the extent and the complexity of productivity and the competitiveness of the ecosystem. These factors were grouped by the World Economic Forum into twelve main pillars: Institutions, ICT adoption, Macroeconomic stability, Health, Skills, Product market, Labour Market, Financial System, Market size, Business dynamism and Innovation capability. In its Global Competitiveness Ranking report, the authority assessed 140 countries and gave each state a score out of a 100 for each individual pillar. This implies that multiple countries can achieve the maximum score for the same pillar. The aggregate score would then express the overall ranking that defines the country’s competitiveness amidst the others.
Malta Competitiveness ranking
Malta recorded a positive performance in various areas of analysis, including; Macroeconomic stability (1st), Social Capital (7th), Efficiency of air transport services (31st), ICT adoption (24th), Health (16th), Skillset of graduates (16th), Product market (36th), Labour market (24th), Active labour policies (19th), and Trademark applications (2nd).
In terms of Macroeconomic stability, Malta is one of the countries that ranked first, that is, with a score of 100, due to achieving high scores on Inflation and Public debt dynamics. This was the result of a well-contained inflation rate and successful policies enacted to reduce public debt.
In today’s global context where technology covers a primary role in production, Malta ranks 24th in ICT adoption. However, investing in technology without investing in digital skills would not yield significant productivity gains. Malta has promptly acknowledged and embraced this concept; hence it has invested resources in developing the skillset of its human capital, as a result of this, ranking 16th out of 140 in this criterion.
Malta also ranks 2nd in Trademark applications: this indicator measures the number of international trademark applications issued directly per million population. Malta is particularly attentive to the development of intellectual property regulations, which is one of the Government’s priorities. In fact, it is foreseen that in its Budget for 2019, the Government will be restructuring intellectual property services and launching a new Trademark Act.
Investing in Malta
Malta is considered as one of the best performing economies within the Eurozone, with an average 10-year GDP growth rate of 4.2%. Together with Germany, the country managed to maintain a steady and sustainable economic growth during rough times following the global financial crisis of 2008. Inward FDI flows in Malta went up by €1.2 billion in the first months of 2017 alone, with a 5-year average FDI inward flow of 79.4 % of GDP. Businesses in Malta operate in a safe and yet attractive environment, regulated by a sound legislation which changes proactively in order to keep abreast of the market’s dynamics. This has shaped the island into a jurisdiction offering cost-effective opportunities in various high-added value sectors such as maritime and logistics, property development, aviation, iGaming, film industry, ICT, life sciences, biotechnological and chemical industries, and advanced manufacturing.
Financial services are a pillar stone of the Maltese economy, and the sector has grown to offer innovative solutions as well as new market opportunities, such as Fintech and Islamic finance. The Government wisely predicted the potential of these new sectors and it is proactively implementing a sound legislation to direct and support these new business activities.
As a law firm with a strong focus on FDI, Chetcuti Cauchi Advocates has always placed significant importance on promoting Malta as a competitive and stable jurisdiction for foreign investment. We act as trusted advisors to a large number of foreign investors in various sectors that we operate in including Malta residency and citizenship by investment, corporate and trust services, capital markets and financial services, yachting and aviation, gaming and IP law.