A genuine appeal

This column normally deals exclusively with economic and financial analysis in order to provide insights to the general public and business community. However, I find myself compelled to deviate today from this, as I feel that recent events, although not purely of an economic or financial nature, could very likely have an impact on Malta’s economy.

As we all know, in recent years, Malta’s international business reputation has experienced notable fluctuations, influenced by various factors impacting its attractiveness to foreign investors. In 2020, EY’s Attractiveness Survey indicated a significant decline in Malta’s appeal to foreign investors, with a 15% drop compared to 2019 – the largest decrease ever recorded. Contributing factors included concerns over governance and a deteriorating international reputation. The downward trend continued into 2021, exacerbated by Malta’s grey-listing by the Financial Action Task Force (FATF). The proportion of foreign companies finding Malta attractive for investment plummeted from 62% in 2020 to 37% in 2021. This period also saw an increase in companies perceiving Malta as unattractive, rising from 25% to 46%. Following Malta’s removal from the FATF grey list in 2022, there was a notable rebound in investor confidence. The EY Malta Attractiveness Index reported that 58% of surveyed companies considered Malta attractive for business, marking a 21-percentage point increase from the previous year. Despite improvements, challenges persist. The 2024 EY Malta Attractiveness survey highlighted ongoing concerns among investors, with 42% identifying reputational risks as a significant threat to Malta’s Foreign Direct Investment (FDI) attractiveness.

Reputation is a very important thing. It can be lost in a second and takes loads of time and effort to build. Malta cannot afford any further bumps on the road that could jeopardise its reputation or build perceptions that have a negative effect on its reputation.

It is with all this background in mind, that I feel that we should approach the proposed reform of magisterial inquiries. On one hand, there are several positive aspects to the proposed reforms ranging from giving the victims that are subjects of a magisterial inquiry the right to be informed of the stage of the proceedings of the inquest, to giving the heirs and relatives of victims of accidents that are subjects of a magisterial inquiry the right to request an electronic copy of the process-verbal at no cost. I also find rather timely the proposed discretion being given to the magistrate to impose the costs of the inquest on the initiator, if in the opinion of the magistrate it was frivolous, vexatious or abusive of the judicial process.

However, there are then other elements of what is proposed which are raising eyebrows. The Chamber of Advocates, in its recent statement, made two points abundantly clear. First of all, one finds it hard to understand why such a delicate reform is being rushed through Parliament. Such a delicate reform needs its time to be adequately discussed and to have an ultimate result which as much as possible brings wide backing from all stakeholders. Secondly, one finds it difficult to accept that private citizens will not be able to go directly to the court to present whatever evidence they have and leave the courts to decide if an inquiry should be kicked off and worse still that the level of proof required by private citizens at this initial stage needs to be at the level that it can stand up in court.

One has to remember that the Venice Commission in 2018 had highlighted the need for better checks and balances to ensure proper governance. On the other hand, in its 2019 report, GRECO recommended reforms to enhance the criminal justice system’s capacity to address allegations involving politicians and senior public officials.

My genuine appeal is a simple one. There now seems a consensus in this country that Malta needs to shift its economy towards one based on higher productivity and more value added. In such an economy, reputation and perception, based on an efficient justice system, becomes even more important. We cannot play with fire and have rushed reforms that can jeopardise all this. Perceptions are very important when investors come to choose a jurisdiction. We have already been here, and everyone experienced the wide-ranging negative effects.

Thus, I appeal to our politicians to allow the necessary time to have this reform discussed and for all persons of goodwill to come forward with their input. This is necessary to ensure that this reform does not in any way effect badly Malta’s reputation and strengthens the application of the rule of law. We just cannot afford to get this wrong.