Skills shortages, infrastructure challenges, cost competitiveness identified as key risks in Malta’s attractiveness
Investor confidence in Malta has surged to its highest level in years, according to the EY Attractiveness Survey – Malta 2025, with 79% of foreign direct investment (FDI) companies – up by 25%, now describing the country as an attractive location for investment.
The findings mark a strong rebound from 2024’s recorded 54% and suggests renewed optimism about Malta’s stability and competitiveness, though long-term concerns over skills shortages, infrastructure challenges and cost competitiveness remain.
The results were unveiled at the EY Future Realised Conference 2025 held at the Mediterranean Conference Centre, marking the 21st edition of the annual survey, which gauges the sentiment of foreign-owned businesses operating across Malta’s key sectors.
The survey was carried out between May and July 2025 and is based on responses from 120 foreign-owned businesses across financial services, gaming, technology, manufacturing, and tourism.
Speaking during the conference, President of the Malta Chamber of Commerce William Spiteri Bailey said that the timing of this year’s event “has never felt so urgent,” given the global fragmentation of trade and Europe’s shift in industrial policy.
“We are at a critical point. The choices we make today will shape Malta’s trajectory for decades. Trade is fragmenting into competing blocs and Europe is changing its agenda. Malta must respond with clarity, resilience, and ambition,” Spiteri Bailey said.
Spiteri Bailey said that Malta’s economic model must evolve toward “quality-driven, high value-added work” rather than quantity-based growth.
He urged the country to strengthen its connectivity and position itself as a “trusted international logistical hub” while embedding AI “not only in business and client services, but also in government operations, through transparent and responsible use.”
“These global shifts cannot be addressed by policy alone,” he said, adding that Malta must “urgently address structural issues” that limit competitiveness.
Remarkable resilience
EY Malta Country Managing Partner Ronald Attard said that Malta had shown “remarkable resilience” in a shifting global landscape.
“This year we have witnessed a substantial rebound in foreign direct investment attractiveness,” he said, noting that Malta’s small size, openness to innovation, and favourable business environment continue to appeal to investors.
However, Attard cautioned that optimism must be tempered by realism, as 60% of investors cite skills shortages as the top risk,” he said.
“There is a strong call for an overhaul of the education system. Competition for investment is intensifying, and Malta must ensure that its workforce remains equipped to meet future demands,” he said.
Attard added that while investors are not retreating from Malta, they are “rebalancing” their strategies amid global uncertainty.
“Malta can be compared to a little garden, it can flourish if nurtured and cultivated properly,” Attard said.
Presenting the survey results, EY’s Simon Barberi said the findings reflect a shift in investor sentiment, with technology and artificial intelligence (AI) emerging as central themes.
Barberi said that Malta’s overall FDI attractiveness has improved, with corporate taxation, social stability, and strong telecoms infrastructure ranking among its strongest assets.
Participants also expressed hopes for Malta to evolve into a country “where people want to work, live, relax, and create,” a greener island that offers a high quality of life and safety alongside competitiveness.
Tax regime, stability, and connectivity cited as Malta’s main strengths
Malta’s tax framework, social stability, and telecommunications infrastructure emerged as the top factors underpinning its attractiveness, with 78% of investors citing the tax system as a key positive, followed by 70% highlighting stability and 68% praising connectivity.
The EY survey noted that these pillars continue to sustain Malta’s position as a competitive business hub, particularly for digitally driven industries and service-based investment.
However, weaknesses were again pointed out, as only around one-third of respondents viewed labour costs (33%) and skills availability (34%) as competitive, while transport and logistics infrastructure received positive ratings from just 18%.
The survey showed that Malta’s R&D and innovation environment, and its transport and logistics infrastructure, remain Malta’s least attractive FDI parameters.
Although nearly half (49%) said Malta’s political, legal and regulatory environment had improved, it remains below previous highs, while innovation capacity, at 20%, lags behind other EU jurisdictions, the survey showed.
The survey found that Malta still benefits from a relatively favourable cost base compared with other countries.
Most investors said Malta’s taxation (62%), energy (58%), and labour (48%) costs were lower or significantly lower than in competing jurisdictions.
The EY survey showed that the country’s value proposition is increasingly under pressure from skills shortages, cost inflation, and international tax reforms.
Investors pointed to tax competitiveness (55%), workforce quality (52%), and the regulatory environment (41%) as their top criteria when making investment decisions.
When asked about Malta’s economic direction, nearly half (48%) of investors said they supported a strategy focused on “better and more” growth, combining productivity and value creation, while 36% preferred “better and less,” prioritising quality over rapid expansion.
Only 13% of respondents backed volume-led growth, the survey showed.
According to EY, this shift illustrated a maturing investment outlook that values sustainable, high-value activity rather than growth by scale alone.
Tourism, gaming, fintech, and AI seen as key growth sectors
Investor sentiment remained particularly strong in sectors such as tourism and leisure (70%), gaming (58%), payments and fintech (48%), and artificial intelligence (47%), all identified as areas with the greatest growth potential over the next five years.
The survey showed that AI is viewed as an especially important driver of future competitiveness, with 42% of companies planning to invest in AI-related initiatives.
However, the lack of specialised talent continues to be a major barrier, as 43% of respondents cited the shortage of AI and data professionals as the biggest obstacle to adoption of AI-related initiatives, surpassing concerns over costs or regulation.
90% of foreign investors in Malta said that they plan to either maintain or expand their operations in the coming year, with only 5% considering reductions and 1% planning to exit.
However, the long-term picture is more cautious, as 61% expect to remain in Malta over the next decade, down from 70% last year, citing rising uncertainty globally.
Moreover, a growing number of investors, 33%, up from 20% in 2024, are unsure about their future commitment.
Infrastructure, skills, and planning seen as national priorities
The gap between Malta’s growing population and its infrastructure capacity remains a pressing issue for investors, the survey showed.
More than half (56%) rated Malta’s infrastructure preparedness as inadequate or very inadequate, and 80% identified infrastructure enhancement as the single most important priority for the country’s future success.
Other key investor priorities include nurturing existing investment (63%), attracting new investment (54%), and improving education and skills, the survey showed.
The top risks to Malta’s attractiveness were ranked as skills shortages (60%), international tax reform (48%), and cost competitiveness (42%).
Commenting on the results, Attard said the rebound in investor sentiment confirms that Malta’s fundamentals remain solid but warned that long-term competitiveness depends on sustained investment in people and infrastructure.
“We have witnessed a substantial rebound in investor confidence, with 79% of respondents now viewing Malta as an attractive location for foreign direct investment,” Attard said.
He said that while the overall sentiment is positive, the emerging pressures that could impact Malta’s attractiveness must be acknowledged.
“Skills shortages, infrastructure challenges, and cost competitiveness have been identified as key risks that require our immediate attention,” Attard said.
He added that 61% of investors now consider skills shortages as the top risk, speaking of the need for a “strategic focus on education and workforce development.”
Attard also cautioned that Malta cannot afford complacency, and said that competition for investment is intensifying, and investors are increasingly discerning in their choices.
“While Malta is viewed as a stable location, we must not take our competitiveness for granted,” he said.
Attard said the findings show Malta continues to attract committed investors but must address structural constraints that could limit growth, ensuring the country remains competitive within the European investment landscape.
He said that Malta’s future competitiveness will depend on how well it adapts to global economic realities and technological change.
“Investors are now rethinking how to grow within limits, pivoting to higher-value activities and using automation to reduce dependency on labour,” he said.
He said that investors are calling for an overhaul of Malta’s education system, enhancing infrastructure, improving skills availability.
“Malta, with the right focus, can continue to play a significant role in a global economy built not on size, but on specialisation, agility, and execution aligned with foresight,” Attard said.
Abela, Borg address event
In his address, Prime Minister Robert Abela compared Malta’s current economic outlook with that of larger European economies, many of which have faced slower growth, higher debt, and declining living standards.
“While in many countries the economic picture has darkened, in Malta the opposite has happened,” Abela said, pointing to reaffirmed positive ratings from international agencies and a significant improvement in Malta’s investor appeal.
“Only 6% of investors plan to leave Malta in the next decade. My job is to convince them to stay,” he said.
The Prime Minister said Malta’s economy is now a third larger than before the pandemic, crediting progressive economic policies for preserving productivity and competitiveness.
“Those who told us to save during the crisis paid more afterwards,” he said.
Abela said that his government’s long-term goals under Vision 2050, which aims for Malta to rank among the top ten EU countries in GDP per capita, for household disposable income to exceed the EU average by 15%, and for Maltese life satisfaction to rank among the highest in Europe.
“These objectives cannot be achieved without a dynamic economy that values human resources and prioritises investment, not just in physical capital, but also in skills and innovation. Let us bring the vision to life and begin building the Malta of tomorrow, today,” Abela said.
Addressing the event for the first time as Opposition Leader, Alex Borg commended EY for fuelling over two decades of dialogue shaping Malta’s economic vision.
“Malta’s attractiveness is bouncing back, a big leap from last year’s 54%, a clear sign of recovery, but not yet a sign of stability. It is progress, not permanence, and that’s why what we do next matters,” Borg said.
Borg warned that skills shortages, reputational issues, and infrastructure pressures show that Malta’s economy “has outgrown its foundations.”
He called for an education system that “prepares children for tomorrow’s jobs, not yesterday’s,” and said that investors will not commit to a system they cannot trust.
“Malta cannot rebuild its brand with slogans, only with integrity. Every tender must be transparent and open to public scrutiny,” he said.
Borg urged collaboration between government, opposition, unions, and employers to design a national competitiveness strategy.
“Our ambition is simple and powerful, to make Malta the easiest country to innovate in, and the hardest to leave,” he said.
