This is my first summer in Malta, and the naysayers were right.

I was warned it gets hot. I didn’t quite realise how hot, and how intense the Maltese sun can be. And there has been little respite this year, with most of Europe having spent the last few weeks trapped under the same enduring heatwave, so even the usual escape routes north have offered little relief.

Just last week, July’s heat record was shattered, according to the Times of Malta, with the country experiencing its hottest July day on record with temperatures soaring to a sizzling 43.3°C. Walk through Valletta, Sliema or any Maltese town on a summer’s day and the reason is clear: the stunning limestone buildings sadly offer little shade, instead absorbing solar energy all day and releasing it slowly through the night, along with the concrete pavements and asphalt roads.

Malta is already the EU country worst placed to escape the heat. In a recent Eurobarometer survey, just 22% of Maltese people reported living within a five-minute walk of a green space, against an EU average of 50% – worse than every member state bar Romania. A follow-up survey found that only 51% said access to a green space was easy, compared with close to 100% in Denmark, Slovenia, Finland and Sweden. Perhaps an unfair comparison, as those countries do not have Mediterranean climates, but Malta’s summer heat is also compounded by having the lowest forest cover of any EU country, at just 4.3%.

Malta can’t control the climate, but it can control how it responds to it. The data indicates that it has more room to improve shade and access to green space than almost anywhere else in Europe – which also means more room to gain.

Green infrastructure is infrastructure

When we think about investment in infrastructure, we naturally think of roads, hospitals, schools and housing. But trees, parks and green spaces should belong on that list too. With temperatures rising across Europe, the case is no longer just an aesthetic one.

Studies across cities including Washington DC, Athens and Singapore, consistently find that increasing tree-canopy cover can measurably lower both air and surface temperatures. Air-temperature reductions are often in the region of 1–2°C, while pedestrian comfort may improve considerably more, since direct shade beneath a tree can substantially reduce the heat experienced by passersby. For a country like Malta, whose narrow streets already trap heat overnight, that difference is not marginal – it can determine whether the evening passiggata happens at all.

The health stakes are real too. More than 10,000 excess deaths have already been attributed to this year’s early heatwave in Europe with the vast majority aged over 65. Another study estimated that nearly 40% of deaths attributed to urban heat across Europe in 2015 could have been prevented had cities increased their tree cover to 30% of land area. Although forest cover and urban tree-canopy cover are not directly comparable, Malta’s 4.3% forest cover underlines the scale of its greening challenge and its opportunity.

Building on what already exists

Reassuringly, the conversation about making Malta greener has already begun. Project Green (projectgreen.mt) is creating and upgrading accessible and inclusive public parks and recreational spaces, and is striving to improve the quality of life for the people of Malta and Gozo. Its aim is to create eco friendly spaces a short walk from residents’ homes. These steps are hugely important, but Malta lacks one single, measurable national target around which to organise its efforts.

So, what if Malta adopted one – along the lines of: “By 2040, each Maltese and Gozitan resident should live within a five-minute walk of a shaded green space.”

Given that only 22% currently do, this is an ambitious but honest target – one that would give Project Green, local councils, and private property developers a shared metric to work towards, rather than merely a general direction of travel.

Thinking small to achieve something big

Malta does not have the space for large new parks, but it does have room for smaller interventions: pocket parks in unused corners, tree-lined pedestrian routes, green schoolyards, planted public squares instead of additional paving, and green roofs or living walls as standard features of new developments.

Species choice matters too. Malta’s native and Mediterranean trees – carob, olive, Aleppo pine, cypress and strawberry tree – are drought-tolerant once established, so greening towns need not place heavy long-term demands on the island’s water supply.

A business case, not just an environmental one

This is what may matter most to business readers.

Energy costs Research on US cities found that peak electricity demand rises by 2-4% for every 1°C increase in daily maximum temperature above a 15-20°C threshold, driven largely by air-conditioning load. Trees can help reduce this by cooling the ambient air and, more significantly, by shading buildings directly, cutting the demand for air-conditioning in the first place.

Property values This is one of the best-evidenced green-infrastructure effects globally. Studies have found that proximity to green space can add a significant premium to property prices. Even conservatively, a national shading target could also be considered a national property-value programme.

Footfall and retail Shaded, walkable streets keep shoppers outdoors for longer and encourage repeat visits, a pattern documented in several European high-street greening projects. To my knowledge Malta does not yet have a published local footfall study to cite. I believe the data exists so it may be worth publishing before the next round of streetscape investment, so the claim can be tested, rather than assumed.

Talent and tourism Malta already markets its climate and lifestyle to remote workers and international firms. A country that is visibly and measurably adapting to Mediterranean heat – rather than simply enduring it – makes a stronger pitch than one that is not.

None of this is to suggest that greening pays for itself instantly. What I hope to demonstrate is that green infrastructure can behave economically in much the same way as other infrastructure projects: an upfront cost with a quantifiable, compounding return.

A piece of a bigger puzzle

Importantly, this proposal needs not sit outside Malta’s national climate strategy. Instead, it supports one of its weakest areas.

The EU’s 2040 climate target commits member states to a 90% net reduction in greenhouse-gas emissions (relative to 1990 emissions) on the way to full climate neutrality by 2050. Malta’s own National Energy and Climate Plan sets a comparatively modest renewable energy target of 24.5% by 2030 – well below the EU-wide collective 42.5% goal. The plan itself attributes this gap to the island’s lack of space for solar and wind farms and the absence of rivers for hydropower.

Malta can’t simply generate its way out of this problem as larger member states can. With limited land for renewables, and cooling accounting for a growing share of energy use, reducing demand is especially important. Malta’s climate plan already recognises the need to cut heating and cooling demand, with the country recording the EU’s largest year-on-year increase in renewable heating and cooling in 2024, making Malta the fastest growing EU nation for green climate control over that year. A national shading target would therefore complement – not compete with – the existing energy strategy: reducing air-conditioning demand without placing further pressure on scarce land or water.

A concrete proposal (if you forgive the pun)

Malta already has many of the requisite building blocks in place: Project Green, cross-party interest, and community pressure. What is missing is a single national measure tying these efforts together, supported by incentives for incorporating greenery into new property and infrastructure developments. A five-minute shaded-green-space target could be embedded in planning policy, tracked by local councils and reported on annually, like any other infrastructure commitment.

Young trees planted this year will provide their greatest benefit not to us, but to generations to come. Malta has repeatedly shown that it can adapt and outperform its size. Measuring national progress by how much shade and green space we create, alongside how many roads and properties we build, would be a fitting next step – and, on the numbers above, a genuinely profitable and healthy one.

Beyond the economic case, proximity to nature is associated with lower stress, cleaner air and greater opportunities for summer exercise. Trees provide shade while helping to capture dust and pollutants. The benefits are environmental, economic, and profoundly human. What’s not to like?

Maria Darby-Walker is a non-executive director; Visiting Fellow, Oxford University and Business adviser / mentor

The post A five-minute walk to shade: Malta’s missing climate target first appeared on The Malta Business Weekly.

Organised by IFSP’s Directors Chapter, IDC Malta, the workshop focused on Strategy and Value Creation, bringing together directors, senior executives and financial services practitioners for a practical discussion on boardroom effectiveness, strategic decision-making and sustainable value creation.

The session forms part of the Boardroom Excellence Workshop Series, a five-part programme designed to elevate governance standards and strengthen boardroom performance in an increasingly complex regulatory and business environment.

Speaking during the workshop, Kenneth Farrugia, Chief Executive Officer at Bank of Valletta, highlighted governance as a strategic capability, particularly in financial services, where trust, accountability and long-term resilience remain central to institutional credibility.

“Strong governance is one of the foundations on which trust in financial services is built,” said Mr Farrugia. “It goes beyond structures, policies and reporting lines. It is reflected in the quality of decisions, the clarity of accountability, and the ability of institutions to create sustainable value while managing risk responsibly.”

Mr Farrugia noted that the sector is being shaped by heightened regulatory expectations, technological change, evolving customer needs and increasing stakeholder scrutiny. In this context, he said, boards and senior leaders must continue to strengthen their judgement, oversight and ability to balance opportunity with responsibility.

“Our collaboration with IFSP reflects BOV’s commitment to supporting the continued development of Malta’s financial services sector,” Mr Farrugia added. “As Malta’s largest financial institution, we have a responsibility to contribute to initiatives that promote professional development, thought leadership and stronger governance capability across the industry.”

The workshop reflects the broader objectives of the strategic agreement between BOV and IFSP, centred on knowledge sharing, professional development and joint initiatives that support Malta’s financial services professionals and organisations.

Through this collaboration, BOV and IFSP are creating practical opportunities for dialogue, learning and engagement on issues shaping the future of the sector, including governance, regulatory readiness, innovation, leadership and long-term competitiveness.

Commenting on the collaboration, Mr Nick Captur, President of IFSP, said: “The relationship between IFSP and BOV reflects the importance of collaboration between professional bodies and leading market institutions. Through the Directors Chapter and the Boardroom Excellence series, we are creating opportunities for directors and senior professionals to engage with governance in a practical, relevant and forward-looking way.”

The Boardroom Excellence Workshop Series combines expert insight, practical case studies and boardroom simulations to support current and aspiring directors and senior executives in strengthening their understanding of board responsibilities and leadership-level decision-making.

BOV and IFSP reaffirmed that continued investment in governance capability, professional standards and sector-wide dialogue remains essential to Malta’s long-term competitiveness as a financial services jurisdiction. Their collaboration will continue to support responsible leadership, regulatory awareness and sustainable value creation.

The post IFSP and BOV strengthen governance dialogue through Boardroom Excellence workshop first appeared on The Malta Business Weekly.

The latest figures show that foreign residents now make up 31% of Malta’s population, with net migration patterns continuing to drive growth. Based on PwC’s demographic modelling, Malta’s population is projected to reach a base case of 636,000 by 2030.

This path puts the country among Europe’s fastest-growing economies by population.

This rapid expansion brings both economic opportunity and important challenges. At its current population level, Malta already ranks as the fourth most densely populated country globally, with a population density of approximately 1,862 people per square kilometre. By 2030, this density is projected to increase to 2,013 people per square kilometre, which will add further pressure on the nation’s finite resources. 

Infrastructure demands require urgent investment

The report highlights clear infrastructure pressures that call for decisive action. Currently, Malta ranks 17th among EU peers on hospital beds per 100,000 residents, with 397 beds compared to the EU average of 511. To simply maintain this relative standing by 2030, Malta would need to add approximately 329 additional hospital beds, meaning a 15% increase. To reach parity with the European average Malta would require nearly 1,054 additional beds, a 48% increase.

Energy infrastructure is also worth considering, given the increasing population. According to the latest data, Malta produced 2,138k MWh of locally generated electricity in 2024, with a net 970k MWh imported to meet total energy demand. Assuming the same level of local energy capacity for a projected population of 636,000, Malta would need to import 1,304k MWh of electricity to maintain current per capita consumption levels, representing a circa 25% increase in imported energy requirement.

While the demographic path presents challenges, it also underscores the urgency of strategic planning. Our projections are based on varying levels of slowdown in current net migration flows. Nonetheless, population is still expected to increase significantly, with the mix of foreign to local residents potentially reaching around 38% by 2030. The key policy change will be ensuring that infrastructure, public services, and long-term planning keep pace with this changing reality.

“Malta’s population growth reflects our economy’s resilience and attractiveness, but it demands proactive planning,” said Lucienne Pace Ross, PwC Malta’s Territory Senior Partner. “The decisions we make today regarding infrastructure investment and resource allocation will fundamentally determine whether this growth improves our quality of life or strains our public systems. We must make sure that our hospitals, energy networks, and essential services scale proportionally with population expansion.”

The full PwC Economic Update offers a detailed update of Malta’s economic performance and sets out demographic projections. To access the complete report and explore detailed insights into Malta’s economic outlook, visit here.

The post Population growth drives urgent infrastructure needs – PwC Malta Summer 2026 Economic Update first appeared on The Malta Business Weekly.

However, while welcoming several of the amendments it had advocated, the Malta Business Bureau cautioned that the reform still falls short of adequately protecting island member states from the disproportionate costs of decarbonisation.

This introduction captures the contrast between the two statements from the outset: the government’s emphasis on success and the MBB’s more measured assessment, setting up the story to present both perspectives.

The government said it is satisfied that the European Commission’s revised Emissions Trading System (ETS) proposal incorporates a number of key Maltese priorities, including stronger protection for Malta Freeport, continued safeguards for the country’s air connectivity and the retention of dedicated support for island Member States.

The proposal for the revision reflects several recommendations consistently advanced by the Government throughout the past years following the entry into force of the current system, which recognise the unique realities faced by island states whose economies depend heavily on maritime and air transport.

The ETS is the European Union’s carbon pricing mechanism, which places a cost on emissions from shipping, aviation and other sectors. While the system is designed to drive down carbon emissions across Europe, its implementation must also ensure that island Member States are not placed at a structural disadvantage simply because of their geography.

These results are the outcome of sustained engagement by the government at European level, backed by continuous consultation with Malta’s private sector, the government statement said. “Government worked closely with businesses, industry representatives and operators to understand the practical realities they face and ensure Malta’s position was firmly grounded in evidence, practical experience and economic realities.”

As a result of these efforts, Malta positively notes that a number of important improvements to the current system are being put forward by the Commission.

Under the proposed revision, transhipment operations involving cargo arriving from non-EU ports and not destined for the European Union will no longer be subject to ETS charges. This is a significant achievement for Malta Freeport, safeguarding its competitiveness against rival transhipment hubs outside the European Union.

The Neighbouring Port clause has also been extended to cover all competing North African ports. This closes a loophole that previously incentivised shipping operators to make an intermediate stop outside the European Union purely to reduce their ETS costs before entering EU ports.

The government said it also welcomes the proposed retention of a dedicated allocation of ETS revenues for Malta, Cyprus and Greece until 2038.

In aviation, the temporary suspension of full ETS charges on departing flights has been maintained until 2032, helping safeguard Malta’s connectivity while limiting additional costs for airlines, businesses and passengers.

Minister for Energy, the Environment and the Regeneration of the Grand Harbour Miriam Dalli welcomed the revised proposal, describing it as proof that Malta can achieve meaningful results when it combines ambitious climate objectives with a strong defence of the national interest. “Climate action must be fair. Island states cannot be expected to carry disproportionate costs simply because of their geography. Throughout its active engagement with the European Commission ahead of this proposal, Malta consistently made the case that Europe’s climate ambitions must go hand in hand with competitiveness, connectivity and fairness. I am pleased that Malta’s realities are reflected in this revision, delivering tangible improvements that safeguard the competitiveness of our strategic maritime and aviation sectors.”

“We look forward to the negotiations in the Council where Government will continue working constructively to deliver further targeted support to our businesses and citizens. Our commitment to climate action is unwavering, but the transition must also be practical, equitable and leave no island state behind,” Minister Dalli stated.

For its part, the Malta Business Bureau (MBB) called for the re-design of EU ETS to deliver for all Member States, especially those in the periphery.

MBB said it has proposed concrete amendments to prevent disproportionate harm to Malta and other island Member States. In line with MBB amendments, the Commission has proposed a reduction in the transhipment activity threshold from 65% to 50% providing relief for Maltese transhipment against North African ports. The review was tasked by European Council conclusions of 19 March 2026, with reducing the volatility of the carbon price and mitigating its impact on supply chain costs, while preserving the ETS’s role in the climate transition.

It nonetheless falls short of proposing tangible measures which will reduce costs for maritime and aviation operators. MBB’s CEO Mario Xuereb said: “. MBB supports ambitious decarbonisation, but the structural realities of island states, higher transport and energy costs, limited economies of scale, and import dependence, must be reflected in the design of the EU ETS. Without targeted safeguards, the reform risks overburdening Malta with the costs of decarbonisation, without reaping any of the benefits.”

Malta, as an island Member State with no land connection to the rest of the Single Market, depends entirely on maritime and air links for the movement of goods and people. The MBB has repeatedly flagged that vessels carrying the majority of goods consumed in Malta return to the mainland more than half empty, meaning the full ETS cost is absorbed disproportionately across the round trip.

Decarbonisation measures in both sectors are far from being feasible to be implemented, and until then, Malta will be left to foot the bill. MBB has submitted concrete textual amendments to the Commission, including partial derogation from the maritime ETS surrender obligation for routes serving small islands with no fixed link to the mainland, and an equivalent free allocation for aviation to and from island airports of less than 10,000 km².

MBB said it had also proposed extending the definition of a “neighbouring container transhipment port” from 300 to 1,000 nautical miles, alongside lowering the threshold from 65% to 50%, which was accepted. While the Commission did not extend the radius itself, it introduced a further anti-evasion safeguard: any port within 150 nautical miles of an EU port with adequate transhipment infrastructure, will now qualify as a “neighbouring transhipment port” regardless of its transhipment share.

MBB welcomed this additional layer of protection against the relocation of transhipment activity to nearby non-EU ports. MBB’s Brussels-based Nigel Caruana said: “This ETS review is the first real test of the Commission’s commitment to tailor policies to island realities. The measures MBB has proposed would mitigate the impact on essential connectivity while preserving the environmental integrity of the system.” The European Commission published its EU ETS reform proposal on 17 July 2026.

The reform, the first legislative proposal shaping the post-2030 climate architecture, adjusts the Linear Reduction Factor, phases out free allowances, strengthens the Market Stability Reserve, and considers extending the system to waste and extra-EU/EEA flights. It also addresses revenue use and the potential inclusion of carbon removals and international credits. The EU ETS was extended to maritime transport from 2024 and reached full compliance from January 2026, with shipping companies now required to surrender allowances for 100% of verified emissions on qualifying voyages. Aviation allowances moved to full auctioning from 2026, following the phase-out of free allocation.

Malta, as one of three island Member States alongside Ireland and Cyprus, faces structural economic constraints recognised explicitly in Article 174 of the Treaty on the Functioning of the European Union (TFEU), which identifies islands among regions “suffering from severe and permanent natural or demographic handicaps.”

The Commission’s ETS 2021 Impact Assessment (SWD(2021) 601 final) recognised that extra-EU imports and exports transported by sea account for over 50% of the total value of traded goods for island countries such as Malta, Cyprus and Greece, and that these countries and regions are among those most exposed to changes in shipping activity resulting from the ETS. Transport costs can exceed mainland benchmarks by up to 300%, and geographic isolation imposes GDP per capita costs estimated between 7% and 36%.

BusinessEurope and several Member States have highlighted competitiveness concerns, while others have called for greater ambition. The MBB, marking its 30th anniversary this year, said it will continue to advocate the Maltese government, the EU Commission, MEPs and BusinessEurope counterparts to ensure the final text of the ETS revision take proportionate account of the structural realities faced by island Member States.  

The post Government claims key gains in EU ETS overhaul as business lobby says more must be done first appeared on The Malta Business Weekly.

There was a time when the financial services industry changed slowly. Banks looked like banks. Insurers looked and acted like insurers. Competitors were traditionally familiar names playing by familiar rules.

That world has moved on. A bank or insurer today may find its keenest competitive threat comes not from a traditional rival, but from a technology firm people deal with every day, or from a fintech challenger.

The question facing financial services businesses everywhere is deceptively simple: how do we stay relevant? It’s a question posed in boardrooms the world over – and Malta is no exception.

Financial services have been one of the island’s economic successes. Over three decades it has built an internationally-recognised industry spanning banking, insurance, investment services, wealth management, payments, fintech and professional services – a sector that today accounts for 7% of Malta’s Gross Value Added and around 6% of the country’s workforce, according to recent figures from the Malta Financial Services Authority (MFSA) and industry bodies such as FinanceMalta.

But thriving industries and businesses rarely have the luxury of standing still.

Successful digital challengers such as Revolut have shown how quickly customer expectations shift – accounts opened in minutes, instant payments, simple apps on people’s phones, a more customer-friendly approach – these have reset what people expect from a financial services institution, even as many continue to navigate the challenges that come with rapid growth and increasing regulatory scrutiny.

The lesson isn’t that every bank or insurer should turn itself into a technology company. It’s that every institution needs to properly understand what its customers truly value. Trust and security remain non-negotiable, but customers now also expect services to be fast, simple, and intuitive.

Established firms carry the weight of legacy systems, regulation, and complex operating models. New entrants can move faster but face the harder task of scaling safely and building a customer base, often at vast expense. Success will go to those who strike the balance: innovative yet disciplined, agile but resilient, customer-focused with robust controls.

As a board director in financial services, one of the more striking changes I’ve seen over recent years, is how the risk landscape has grown more complicated. Operational resilience is now a boardroom issue. Businesses depend on technology providers, outsourced partners, cloud infrastructure, and increasingly intricate supply chains – and a problem outside the organisation can quickly become a problem inside it, as we saw with the cyberattack on Jaguar Land Rover in the UK. The Cyber Monitoring Centre estimated that the attack cost the UK economy £1.9 billion (€2.2 billion), describing it as one of the most damaging cyber events in the country’s history; more than 5,000 businesses in JLR’s supply chain were affected, with production halted for weeks and the ripple effects lasting considerably longer.

The relevance for financial services’ companies is clear: today’s risks rarely stay neatly contained within company boundaries or traditional sector definitions. Businesses need a clear picture of not just their own operations, but the wider ecosystem they sit within.

Customer data poses a similar challenge. Financial institutions hold vast quantities of sensitive information. Used well, it improves services, helps prevent fraud, and creates better customer experiences. But systemic weaknesses will be exposed and exploited, damaging, possibly irreparably, the one asset a financial business can’t do without: trust. Reputational harm, regulatory censure, fines, and lost business follow close behind.

One risk gaining ground is “shadow AI”, where employees paste sensitive client data or code into unapproved, publicly available AI tools, creating an immediate and often invisible data leak. Clear AI governance, employee training, and appropriate controls, are now essential parts of good risk management.

This is why good governance matters. The best firms build cultures where innovation is encouraged but challenge is welcomed too – where ambitions for growth are matched by investment in controls, people, and systems.

For Malta, these questions carry weight. Smaller financial centres have real advantages: they can be entrepreneurial, responsive, and closely connected, with regulators, businesses, and policymakers able to work together and respond to issues more easily than in larger markets. But international credibility rests on keeping standards. The MFSA’s 2025 Annual Report, published earlier this month, gives some sense of the scale of supervision now under way: 1,849 supervisory interactions with authorised entities over the year, 1,023 new authorisations approved, and €570,673 in penalties imposed. Consumer protection, sustainability, cyber resilience, and operational efficiency all feature as continuing priorities, alongside developments across banking, insurance, capital markets and crypto-assets, as European and global standards keep evolving. Sustained attention to anti-money laundering, financial crime prevention and effective regulatory oversight will remain essential to that credibility.

The strongest financial centres have come to recognise that effective regulation is not the opposite of competitiveness – it’s part of what makes a jurisdiction attractive.

EU membership is central to Malta’s competitiveness. A single MFSA licence allows a Maltese-based financial company to “passport” its services across the entire EU and EEA market of some 450 million consumers, under frameworks such as MiFID II, Solvency II and PSD2 – and, for crypto-asset firms, the newly harmonised MiCA regime – reducing the need for separate authorisations across individual markets.

But membership cuts both ways. Malta must match the standards of other member states, consistently. Firms are working through the operational requirements of the EU’s Digital Operational Resilience Act (DORA), and crypto businesses face this year’s deadline to convert from Malta’s earlier national licensing regime to full MiCA authorisation. Effective passporting depends on strong trust between regulators, particularly as other EU supervisors rely on Malta’s oversight as well as their own. Moreover, Malta isn’t the only small EU domicile offering this access – Ireland, Luxembourg, Cyprus and Lithuania are competing for much of the same business – so Malta’s advantage will need to be earned through speed, transparency and sustainability, not through the licence alone.

So, what might the next decade look like?

The successful financial services businesses of the future may not simply be those with the greatest scale or the newest technology. They’re more likely to be those with the ability to continually reinvent themselves – organisations that adapt to customers’ needs, use technology intelligently and safely, attract the best talent, and maintain the discipline and resilience on which trust depends.

For Malta, the opportunity is significant. The island has already proved that a small jurisdiction can build a financial services industry with international relevance. The next challenge is moving from growth to sustained excellence.

Financial organisations that succeed won’t be those that choose between innovation and regulation, speed and security, ambition, and responsibility. They’ll be those that understand these qualities must exist together – and that agility only creates lasting value when combined with world-class standards, strong governance, and a relentless focus on good customer outcomes.

MFSA’s CEO, Kenneth Farrugia, recently stated that the authority’s focus remains on “building trust, strengthening resilience and shaping the future of Malta’s financial services industry”.

It’s a fitting ambition – not only for Malta’s regulator, but for every Maltese financial services business preparing for the future.

After three decades of growth, Malta’s financial services industry has earned its place on the international stage. Its next chapter will be defined not by protecting what has already been built, but by having the confidence to challenge it.

Maria Darby-Walker, non-executive director, Visiting Fellow at

Oxford University and Business mentor

The post Beyond growth: The next test for Malta’s financial services industry first appeared on The Malta Business Weekly.

Interest in the property market in Malta has been always high on the local agenda. This is understandable given that the provision of shelter is a basic human need, the strong culture of home ownership, and of course the scarcity of land.

Property prices have been on a steady rise over the past decade, where according to Eurostat these rose by 73.6% between 2015 and 2025. In the Euro area the rise was less strong at 53.5%. Thus, over the past decade, property prices in Malta increased on average by around 2ppts more each year than the Euro area average.

Was this a bad thing? The reply to such question depends on what has driven this increase in prices. Price increases driven by speculation, which is not backed by underlying fundamentals, would mean that such increases could be short-lived, and reversals would be very detrimental to both citizens and the financial system.

But this does not appear to have been the case for Malta over the past decade. Firstly, GDP per capita at Purchasing Power Standards in Malta rose from 93.4% of the Euro area average in 2015 to 106.8% by 2025 – an increase of 14.3% over the past decade. This difference largely reflected economic growth in Malta that consistently outpaced that of the Euro area. This means that growth in the value of land in Malta largely reflects this difference in economic growth fundamentals. Malta simply generates more output per capita (and more so per square metre) relative to the Euro area, and therefore the value of land should also relatively rise.

Secondly, the Central Bank of Malta’s indicator of misalignment of property prices has shown over the past 10 years that property prices have not been overvalued, barring perhaps during the Covid years of 2020 and 2021, where the extent of overvaluation was generally well below 5%. Although the index after 2022 suggests that property prices were undervalued by about 5%, allowing for data measurement and modelling imprecisions, these can be considered as broadly in line with fundamentals.

Thirdly, although according to Eurostat construction costs have risen over the past decade, up by 45.3% (Euro area up by 47.1%), the rise in property prices has outpaced such increase in costs which suggests that the rise in property prices has been significantly driven by the rise in the value of land. Indeed, a study by NSO published in September 2025 shows that construction costs to the total combined value of a property (construction cost plus land value) has declined from about 39% in 1995 to just 17% by 2024. Just as companies pride themselves in increasing the value of their equity in stock markets as their earnings rise, this is also the case for the value of land as the earnings that it can generate increases.

While one could argue that if such land had been put to different uses, Malta could have perhaps generated even faster growth, in practice undertaking such counterfactual exercises are fraught with difficulties because one would need to also assume a different skill set of labour resources and entrepreneurs and capital that are needed for different kinds of activities, which usually take time to develop.

Optimising land use, which in the case of Malta is a very scarce resource, remains undoubtedly always a priority, particularly for a small island state. However, this is no simple task because of the existence of property rights, be they financial assets or land, which are governed both through national legislation and by the EU Charter of Fundamental Rights and the European Convention of Human Rights.

In recent years, following the strong growth of tourism in Malta, some have called for halting permits for the construction of new hotels. Restricting supply would undoubtedly benefit existing hotel owners as it would limit competition and raise the value of such licence. A similar argument is also now surfacing in respect of the proliferation of supermarkets.

However, such restrictions would run counter to the principles of a free market and competition, where the inefficient are usually weeded out when demand does not grow sufficiently in line with supply.

What policy makers can do is embark on strong town-planning policies, where for example hotels are zoned in specific areas, while designated towns and villages can be earmarked exclusively for residential use, rather than allowing haphazard development of various types of tourist accommodation, such as, complexes, hotels and even apartments, all over the island, which inevitably lead to conflicts between residents and businesses.

Others have argued that the use of land for tourism purposes is not generating a good return for the country, with claims that the increase in revenue was lower than the rate of inflation, and hence this would merit diverting land resources elsewhere. A comparison of tourist expenditure per night stayed (a far more appropriate measure than expenditure per tourist) in 2025 with that of 2019 (pre-Covid) shows that this increased by just over a third, whereas the HICP increased by just over 19%, meaning that since 2019, tourist expenditure increased in real terms on average by 2% each year. The first four months of 2026 continue to show such trends, with expenditure in real terms increasing by around 1.5%.

While Malta’s land has significantly risen in value because of its strong fundamentals (read as ability to generate revenue), nevertheless, competing use for such land needs to be carefully managed, partly through zoning policies and regulation that aims for activities that generate better returns, like higher class tourist accommodation facilities, without infringing on property rights while ensuring continued space for competition.

At the same time, incentives can be recalibrated to encourage the development of labour skills and capital investment towards activities that require relatively less land-use (given its scarcity), are relatively more kind to the environment, and that can provide a reasonable return that enables citizens to improve further their living standards and quality of life. While reconciling these three objectives and concurrently respect property rights can be challenging, especially in a small island state, nevertheless, the direction of travel that Malta needs to take has been never so clearer at this juncture.

Alexander Demarco is governor of the Central Bank of Malta

The post The rising value of real estate first appeared on The Malta Business Weekly.

Lost time in congestion translates directly into delayed deliveries, missed appointments, reduced efficiency, higher operating costs, and lower quality of life. When traffic becomes normalised, the country pays for it in hours lost, fuel wasted, wellbeing reduced and business opportunities diminished, the chamber said.

It added it has been consistently putting forward concrete proposals to address Malta’s traffic and mobility crisis throughout the last legislature. We have done so in published press releases, consultation documents, pre-Budget submissions, pre-election submissions and sector-specific proposals because the status quo is not sustainable. Yet, despite repeated warnings and practical suggestions, very few of the Chamber’s recommendations have been taken on board in any meaningful way.

“The Malta Chamber has said this repeatedly: a real shift in behaviour will not happen through incentives and positive reinforcement alone. If the objective is to reduce private car dependency, disincentives must also form part of the policy mix. Without a balanced approach that includes practical alternatives and measures that make continued car use less attractive in peak conditions, behavioural change will remain limited and the roads will remain congested,” the chamber said.

It is of great concerned to note that effective implementation improves quality of life and productivity has been lagging far behind. In an age of digitalisation and AI, Malta is still discussing basic coordination issues, with too many roadworks, permits and transport decisions still managed in fragmented ways. The country cannot continue deploying manpower to manage roundabouts and congestion manually when intelligent traffic-light systems, smarter data tools, and better coordination platforms should already be standard.

The Malta Chamber therefore reiterated its call for a fundamental change in the way traffic is managed. This is not a matter of isolated fixes; it requires a coherent national effort, backed by strong governance, proper coordination and the political courage to take decisions that may be difficult in the short term but are essential for the country’s long-term health.

The Malta Chamber’s proposals include the following:

• Introduce mobility e-wallets funded through targeted urban parking and congestion-management revenues, so that the scheme promotes actual modal shift.

• Use an AI driven solution through which local councils process domestic and business requests for road closures and permits, including an interactive public-facing platform to give residents and businesses advance visibility of disruptions to allow for their proper planning. This system should build on and be an integral part of the internal system being used between various government entities intended to minimize road disruptions and which currently is lacking on the public-facing on-the-fly information updates.

• Introduce a public-facing platform for local council domestic and business requests for road closures, giving residents and businesses advance visibility of disruptions. This should complement the existing coordination system between entities, while addressing the missing public-facing element.

• Reform school transport through geographic pooling and wider use of supervised walking and community-based initiatives to reduce school-front congestion.

• Deploy smart parking information systems in congestion-prone localities to reduce unnecessary circulation in search of parking.

• Roll out smart mobility and logistics solutions for commercial areas, including loading-bay management, delivery-slot booking and enforcement tools.

• Use public-private partnerships to relocate on-road parking into underground or multi-storey facilities, while freeing surface space for more efficient mobility uses.

• Develop logistics consolidation hubs where evidence supports them, in order to reduce duplicate freight trips and improve competitiveness.

• Link public funding for transport and infrastructure to independently verified mobility outcomes, so that money follows results, not promises. 

The Malta Chamber urged the government to heed these proposals with urgency and seriousness. Malta can no longer afford piecemeal measures, slow implementation and half-measures that fail to address the root causes of congestion. If Government does not act decisively now, the country risks entrenching inefficiency, weakening competitiveness and failing residents, workers and businesses alike. It’s time to break the gridlock!

The post Traffic cannot remain the order of the day, Malta Chamber says first appeared on The Malta Business Weekly.

Total tourist expenditure was estimated at €1,339.6 million, 14.7 per cent higher than that recorded for the same period in 2025. Total expenditure per capita decreased to €800 from €823 in 2025.

The number of tourists visiting Gozo and Comino, including both same-day and overnight visitors, totalled 845,587, or 50.5 per cent of total tourists.

Total inbound tourists in May 2026 were estimated at 457,636, an increase of 22.3 per cent when compared to the corresponding month in 2025.

During the month under review, a total of 424,926 inbound tourists visited Malta for holiday purposes, and 23,791 tourists came for business purposes. The largest share of inbound tourists consisted of persons aged between 25 and 44 (37.4 per cent), followed by the 45-64 age bracket (34.2 per cent). British, Italian and Polish residents made up 44.8 per cent of total inbound tourists (Table 4).

Total nights spent went up by 17.5 per cent when compared to May 2025, reaching 2.6 million nights. The largest share of guest nights (88.0 per cent) was spent in rented accommodation establishments. The average length of stay of total inbound tourists stood at 5.7 nights.

Total tourist expenditure stood at €419.9 million, an increase of 15.5 per cent over the corresponding month in 2025. The average expenditure per night was estimated at €162.1.

The number of tourists visiting Gozo and Comino, including both same-day and overnight visitors, totalled 268,229, or 58.6 per cent of total tourists.

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The strategy includes further investment in the quality of education, infrastructure, digitalisation, governance and academic capacity, with the aim of making ITS more modern and internationally recognised by 2030.

It also provides for the  modernization of the institute’s curriculum, the introduction of new specialist courses and increased collaboration with tourism and hospitality operators.

The plan will also seek to expand ITS’s international presence while building on the Skills Pass programme, which is intended to strengthen professional standards among workers in the tourism sector.

Tourism Minister Jo Etienne Abela said investment in ITS was a direct investment in the future of Maltese and Gozitan tourism and in the professionals expected to lead the industry in the coming years.

He said the institute remained one of the main pillars of supporting the development of workers in Malta’s tourism and hospitality sectors after almost 40 years of operation.

Abela said the strategy was aligned with the Malta 2050 Vision and the government’s objective of developing a tourism economy based on quality, skills and higher-value services.

“Tourism is not measured only by the number of visitors who reach our shores,” he said, adding that service quality, visitor experience and the professionalism of workers were also central to the sector’s success

ITS chief executive Pierre Fenech said the strategy built on the previous plan, during which the institute achieved most of the key performance indicators it had established.

He said the new plan reflected the institute’s achievements while setting further targets intended to deliver measurable and long-term results.

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The Dear CEO Letter provides greater transparency on the work undertaken by the Insurance and Pensions Supervision Function (IPS) in reviewing quarterly and annual financial regulatory returns submitted by (Re)Insurance Undertakings. The publication also outlines the MFSA’s supervisory expectations relating to financial reporting, solvency monitoring, governance and data quality.

(Re)Insurance Undertakings are required to submit a range of financial regulatory returns to the MFSA, including management accounts, quantitative reporting templates, solvency reports and audited financial statements. These submissions support the authority’s ongoing assessment of firms’ financial strength, risk exposure and long-term solvency.

The Dear CEO Letter explains the supervisory review process applied by the MFSA’s Financial Analysts, including risk assessments, solvency analysis, review of key performance indicators, investment portfolio oversight, and the assessment of intra-group and related party transactions.

Particular emphasis is also placed on the importance of accurate, complete and consistent regulatory reporting. The MFSA notes that high-quality data remains essential to effective supervision, financial stability monitoring and collaboration with the European Insurance and Occupational Pensions Authority (EIOPA).

The publication further outlines the authority’s expectations for (Re)Insurance Undertakings when preparing and submitting quarterly and annual financial regulatory returns. These expectations include enhanced narrative reporting, detailed financial breakdowns, updated rolling budgets, and strengthened governance and sign-off procedures.

Commenting on the publication, MFSA head of Insurance and Pensions Supervision, Ray Schembri, stated: “A financially sound and solvent (Re)Insurance Undertaking plays a vital role in safeguarding the public interest by ensuring that claims are honoured, economic stability is preserved, and trust in the insurance market is upheld. In this context, the MFSA’s responsibility to deliver strong and effective regulatory oversight is central to maintaining confidence, resilience, and integrity across the insurance sector.”

The Dear CEO Letter forms part of the MFSA’s ongoing efforts to strengthen regulatory engagement with the insurance market, promote supervisory transparency, and reinforce prudent financial and solvency practices across the sector.

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