There’s a popular narrative that the country doesn’t need the real estate sector. It’s not the engine of the economy, but it’s one of its lubricants. We hold our breath and recall salient electoral pledges sung by Labour influencers in the lead-up to the party’s unprecedented fourth consecutive victory. Among the many pledges made were:

• The €1,000 annual “super bonus” for workers (minimum €500 for part-timers); next, more family/parental support, such as extending maternity leave to 26 weeks; introducing six months of government-paid parental leave (shared); additional paid leave for new parents; and a €5,000 birth bonus per child.
• More exciting freebies include extended housing help – the “My First Home” scheme: an interest-free government loan of up to 25% of the property value for first-time buyers. Added to these incentives were a range of youth-focused measures, including a commitment to exempt the first €30,000 of income from tax for three years for young people entering the workforce or starting a business. An even bigger incentive was reserved for pensioners, who were promised a €50 weekly increase over five years, on top of COLA adjustments.
• The Chamber of Commerce applauded promises for their members, such as €250 million for economic shocks; a target of 4% annual GDP growth; keeping the deficit under 3%; and more high-quality jobs. Nothing pleases the sans-culottes more than the promise to freeze construction during appeals; revise local plans; build two Gozo Channel boats; and protect green spaces (for example, Manoel Island and White Rocks as national parks).

Some pledges are expensive or complex (for example, major infrastructure, large pension increases, extensive school modernisations) and may face delivery challenges. The government is likely to prioritise the most visible ones (bonuses, family benefits, first-time buyer help) early on, but full delivery on the broader manifesto will depend on economic conditions and execution – areas where previous Labour governments have shown both strengths and delays.

The Central Bank has taken a bullish stance towards Malta’s economy, revising its GDP growth forecasts upwards and saying overall risks to economic growth in 2026 are tilted to the upside. It expects Malta’s economic growth to be largely fuelled by an increase in domestic demand and a gradual recovery in private investment. Net exports will also contribute to growth, though less than domestic demand.

Inflation risks are also slightly tilted to the upside, the Central Bank said: geopolitical and global trade issues could all create supply-side bottlenecks that fuel inflation; wage pressures could be stronger than expected; and unfavourable weather conditions, as well as some policies supporting the green transition, could also push up inflation.

Growth is projected at 3.7% in 2026, 3.6% in 2027, and around 3.8% in 2028 (Central Bank). The IMF expects Malta to lead Europe with ~4% average annual growth through 2031. All the while, there is a healthy prognosis that we did exceed EU economic targets, with GDP growth reaching 4.9% at constant prices in 2024.

One congratulates Clyde Caruana, Finance Minister, as a dignified economist announcing a generous budget for 2026 which, inter alia, aims to help a low-income stratum of society, nurture young families, and lift up pensioners’ lot in fighting the cost of living. In his budget speech, he stressed that Malta’s economy aims for its next leap forward in terms of quality, to start producing more clean energy by harnessing natural resources like wind and solar power.

Many sustain a common perception that commercial banks are brimming with idle cash yet, as a general rule, give a hard time when approached to lend depositors’ money. This is true, however, as a result of Malta’s FATF grey-listing in 2021; banks had taken a cautionary approach and decreased their risk appetite, particularly in areas where they lacked sufficient knowledge of proposed business lines or activities. Malta’s swift removal from the Grey List in 2022 has since leveraged expectations that banks return to their previous stance and become more approachable.

Moving on, one notes with satisfaction a projected compilation by foreign experts of a Malta Vision 2050. Naturally, no discussion is complete without mentioning the exemplary tourism revival since the two ugly years of the pandemic.

On a sore note, we cannot omit to mention a drawback in our educational system, with only one in five students passing Matsec exams. Realistically, given the millions invested in education, the dismal maintenance of a low scholastic level each year carries deep economic and social implications for Malta’s both present and future AI digital industry.

In summary, many hope that 2026 will augur well for our leaders to stand tall, forget the political divide, and try to boost exports by lifting their heads above the parapet.

The post Middle East burns yet Malta’s prospects are bright 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.

However, beneath the surface of this consumer boom lies an unstable foundation. An analysis of official population data from 2023 through 2025 reveals a structural shift: Malta’s domestic labour supply is contracting, leaving the economy heavily reliant on an exponential influx of foreign workers. Moreover, the present economic growth model is facing diminishing returns, marked by a stagnation in post-pandemic labour productivity. As the country hits physical and infrastructural capacity limits, the negative externalities – ranging from gridlock traffic to severe environmental and noise pollution – are forcing a reassessment of what constitutes a successful economic growth model.

By mapping these changes onto Maslow’s Hierarchy of Needs, it becomes clear that an economic strategy, built solely on boosting transactional spending power, is encountering a hard psychological and sociological boundary. As citizens attain material affluence, their priorities naturally pivot toward qualitative, higher-order needs: time, wellness, and environmental peace.

The composition of Malta’s population growth reveals that the domestic Malta native engine of the workforce has nearly shut down. A year-on-year analysis, as per below, from the official population statistics, establishes a clear trend line:

*Note: The breakdown by broad citizenship was introduced in the 2024 reporting cycle.

The critical takeaway from this demographic data is the near-total collapse of natural population growth. In a nation of over half a million people, the natural increase in 2025 was just 98 individuals. Every ounce of economic expansion is being fuelled by labour importation. By the end of 2025, non-Maltese citizens comprised nearly one-third (31.06%) of the entire resident population.

Historically, importing labour is a viable short-term strategy to cope with rapid economic expansion. However, Malta’s post-pandemic model has relied on adding headcount rather than multiplying value.

Data clearly indicates that Malta’s post-pandemic labour productivity trajectory has flattened, and in certain labour-intensive sectors, actually declined. When economic growth is achieved purely by importing more people to do low-value or low-digitised tasks (for example: manual logistics, traditional hospitality, basic construction), Gross Domestic Product (GDP) grows horizontally rather than vertically.

This horizontal growth model creates a vicious cycle:

• Low productivity requires more workers to maintain output;
• More workers expand the total population, requiring more infrastructure;
• Expanded infrastructure requires further low-skilled labour to build and maintain, depressing the national productivity average even lower.

With a high worker turnover rate – evidenced by the 12,062 third country nationals who emigrated out of Malta in 2025 alone – businesses face continuous onboarding and training costs, preventing the accumulation of institutional knowledge and technical competency.

While government intervention via handouts, subsidies, and tax cuts has successfully sustained baseline financial liquidity, it has directly contributed to degrading the physical environment. The addition of roughly 46,000 net residents in a brief 36-month window has pushed much of the island’s infrastructure to its physical limits. For residents, everyday life is marked by traffic congestion, persistent construction noise, visual and environmental pollution, and a severe deficit of tranquil green spaces.

This tension can be decoded using Maslow’s Hierarchy of Needs. When a society is struggling economically, government policy that maximises disposable income addresses fundamental Physiological and Safety Needs. Handouts and subsidies act as a safety net, ensuring people can afford energy, groceries, and basic comforts.

However, once these transactional, material needs are consistently met – as they have been by Malta’s high-employment, subsidy-backed economy – citizens naturally ascend Maslow’s pyramid. Their focus shifts to higher-order requirements: Safety and well-being (breathing clean air, enjoying quiet environments, stress-free commuting) and Time (spending fewer hours stuck in gridlock and more time on leisure or with family).

The paradox of the current Maltese model is that the very mechanism used to elevate citizens’ financial standing actively destroys the environment required to fulfill their higher-order needs. A citizen with an additional €100 of disposable income cannot use that money to purchase clean air, buy their way out of a one-hour traffic jam on the standard commuter routes, or escape the pervasive noise of an over-developed neighbourhood.

In my humble opinion, any political or commercial strategy built on the assumption that boosting spending power will permanently secure majority public support is operating on a flawed, short-term premise. Transactional politics works only when a population is trapped at the base of Maslow’s hierarchy.

As Malta’s population crosses the threshold where more than 31% of the country is foreign-born in order to sustain this economic model, the collective focus will likely be shifting, whereby the primary grievance of the Maltese public will no longer be lack of spending power, but a systematic erosion of their quality of life.

In conclusion, I strongly believe the country faces a mandate to restructure its economy around vertical growth. For both public policy and private businesses, the ultimate priority must be to digitalise operations and aggressively increase labour productivity. Instead of hiring five additional workers to handle manual administrative workflows, retail and services must invest in AI, automation, and advanced software architecture. Instead of relying on foreign labour to mask operational inefficiencies, businesses must upskill their existing workforce, offering higher wages for technologically augmented roles based on re-engineered processes. This also holds for the public sector.

Only by generating more economic value per capita can Malta sustain its economic health while reducing the physical footprint of its workforce. Boosting spending power is a short-term strategy that has run its course; the future belongs to sustainable, high-productivity models that protect the very environment in which people live and spend their time.

The post The limits of a transactional economy 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.

At times, here in Malta, discussions about equality become entangled in political narratives or selective references to religion or sexual orientation. Yet the principle at stake is far more fundamental. As Auxiliary Bishop Joseph Galea Curmi reminded us in his homily during the appointment of the new Members of Parliament, public service requires us to treat every person with the dignity and respect they deserve as human beings, and that when we speak, we do so out of conviction rather than convenience. Every person in this country wakes up with the same hopes. We all want to live with dignity, to be treated with respect, and to have fair opportunities. And every person deserves to know that if they ever face injustice, they will not be left alone, and that the State will be there to protect them, whoever they are and whatever their background may be.

Some people confuse minority rights with other concepts, and too often they are reduced to a narrow frame, usually centred on sexual orientation. But equality is far wider than that. It includes inter alia race, religion, skin colour, disability, and every characteristic that has historically been used to exclude or diminish people. A modern European democracy must ensure that everyone feels protected, not only because it is morally right, but because Malta is a member of the European Union, a Union built from the ashes of the Second World War, and the atrocities that preceded it. The European Charter of Fundamental Human Rights is meant to be the foundation of the Union, yet today Europe is struggling to uphold that legacy. The European Commission has gone AWOL.

Sadly, extreme‑right populist narratives have gained traction across the continent, turning minorities into political scapegoats. The European Commission has not always responded with the firmness required. They are actually absent. While Malta has advanced significantly in equality legislation, progress does not mean completion. Discrimination persists, and many families – including those with children of mixed heritage or different races – still face prejudice. This week’s parliamentary debate will see a new law to amend the Constitution and reduce discrimination against minorities.

Consultation on these reforms began in 2014, more than 12 years ago, under then-Minister Helena Dalli. Stakeholders ranging from the Malta Employers’ Association to unions, the Church, and civil society were engaged extensively. The process was deliberate, inclusive, and thorough, spanning five years, and the first reading was presented in 2019. The result is legislation designed to ensure that dignity, freedom, and equality are not merely constitutional ideals, but lived realities.

Every generation leaves behind institutions that outlast governments, parliamentary majorities, and political cycles. Institutions are the living memory of democracy. They guarantee that rights do not depend on who holds power. They ensure that the State itself is held accountable. This is why the new Commission matters. It is a structural investment in Malta’s democratic architecture. It strengthens legal protections, enhances independence, and ensures that no person is left vulnerable to discrimination.

Critics have raised concerns about the Anti‑Deadlock Mechanism of the appointment of a commissioner, arguing it may affect independence. Yet the same voices praise the former National Commission for the Promotion of Equality – an institution that operated directly under a ministry and had no structural independence. Consistency matters. Well, independence cannot be defended selectively. The Opposition must decide what it wants. As the smallest nation in the European Union, Malta has often risen to the occasion. When other countries hesitated on civil rights, we moved forward. I still remember the 2014 legislation when the Opposition was against the introduction of the civil union for same sex couples.

Indeed, the establishment of the Equality Protection Commission sends a strong message. Certainly, Malta is committed to strengthening legal structures so that no one faces discrimination. This does not diminish anyone’s rights; it protects them. And it sets a standard that the European Union should emulate. Surely, Europe must work harder with its member governments to ensure that discrimination is not tolerated anywhere in the Union. Malta’s example shows that even small States can lead.

No one chooses where they are born, what they look like, or who they are. Yet these characteristics still shape how some people are treated. Parents worry about the narratives that could disadvantage their children simply because they are mixed‑race or come from different cultural backgrounds. This is why the new Commission is essential. It will serve every person without distinction, preference, or fear. It will protect the vulnerable. If implemented wisely, it may inspire other countries to follow Malta’s lead.

In a turbulent world, where geopolitics is shaping our lives, Malta has chosen not to be a spectator. It has chosen to be a leader of change – strengthening democracy, reinforcing trust in institutions, and ensuring that dignity remains at the heart of our national identity. Thank you to those who contributed to this legislation.

The post The National Commission for Human Rights and Equality first appeared on The Malta Business Weekly.

At times, we drive past different areas and do not realise changes in the area’s topography. However, I publicly asked why several parking spaces might now be missing due to this boundary wall. What I did not notice was a massive pile of construction rubble sitting behind it. The rubble, or construction waste, has been covered with green mesh all along, the same kind we used to cover our ceilings in summer to protect them from excessive heat. Someone brought this to my attention. Driving towards the Santa Venera tunnels, it is clearly visible. It is worth mentioning because people are asking why this area is changing and why we, who work in the area, including the residents, have to endure this debris pollution. These examples show how small changes can accumulate and why proportionality must guide our assessment of development across different localities.

Surely, I welcome the introduction of protection for Wied iż-Żrinġ and other areas, inter alia, the protection of open spaces that were turned into green spaces and are within the development zone. However, we cannot use these examples as a false equivalence to set aside other narratives for decisions related to excessive development. We need to pay attention to how we frame our narratives. This is not 2015 or 2020 anymore; we are now in 2026, with people demanding different priorities, including protecting the environment and revisiting how we plan and do things. I understand that decisions based on the 2006 rationalisation need to be made, and that we cannot discriminate against those whose land is included in the development zone. However, we need to distinguish between the planning phase and the within-development scheme. The world changed, and so did the way we must do things. The year 2006 is two decades ago. Frankly, the new voters and the electorate hardly remember those years. Those who voted for the first time in this election were not even born when the decision was taken.

My point is simple: proportionality must guide the upcoming applications. By proportionality, I mean practical planning considerations such as height limitations, buffer zones, adequate green lungs, and density thresholds that respect the surrounding communities. In the Swatar development up for a decision next week, proportionality must be applied. I am not saying the development should not be carried out, because that land belongs to private operators and it was the Nationalist Party’s mistake to include it in the development scheme in 2006. Yes, it was a serious mistake, and regardless of what they say or how they try to reshape the narrative, the mistake was theirs. What the Planning Authority can do is apply proportionality to the proposed development. We have spoken a lot about the quality of the local environment as part of the Well-Being Index presented by the party in government, of which I am a member. The quality of the local environment must consider excessive development and the need for adequate green space to provide breathing room in an already highly urbanised area, with densely-populated Msida across the Swatar valley. Therefore, I urge the Planning Authority to apply proportionality when deciding on this application.

Indeed, I registered to attend the hearing and to join the Executive Council web meeting scheduled for 14 July. My point in being present is to honour the promise I made to residents to oversee the planning application and to see what the decision will be. Also, we cannot afford to have only MPs from the other side of the bench articulating a different narrative and shifting blame to the current government, as if it were not their fault that the valley will be developed. What the Planning Authority can do, and we, as MPs, can signal, is that proportionality must guide development and allow for the stipulated buffer between the building spaces and the already highly urbanised area. We, as MPs, are bringing our constituents’ concerns to the public and the authorities.

As a country, we have not only an environmental responsibility but also a social one, because this is not just about altering the environment once and for all, but also about affecting communities and their surroundings. Personally, I could have stayed mum. However, staying mum will not aid the reorganisation of our country’s planning malaise. And it is not faithful towards my constituents and my ESG values. This is not about criticising the project or the developers, or, for all it matters, the Planning Authority, as by now you know that I try to offer Pareto-optimal solutions and find a trade-off that works for everyone when I write about a topic. As I said in my first statement to the media when I was elected MP, my work is related to Environment, Social and Governance. These themes were easily integrated into the current PL’s manifesto. Certainly, I am writing about this because I have been on the ground in Swatar, – otherwise I would not have received 562 first-count votes in just 21 days – heard residents’ concerns and realised how highly urbanised the area has become. And I heard the silent ones, not those that make the most sound. The valley is the only green lung, providing a bit of sanity. Building it all would be a pity and a mistake.

And as I said in my maiden speech, we borrow the environment from future generations. Hence, we have a responsibility as parents, as policymakers, and as politicians of this country.

The post Proportionality must be the guiding principle of Malta’s planning decisions first appeared on The Malta Business Weekly.

For an empire that has spent its 89-year history avoiding domestic plant closures, this moment is a sobering wake-up call. It is visual proof that even the largest industrial giants can be brought to their knees when structural rigidities collide with a hyper-competitive global marketplace.

Volkswagen’s arrival at this unprecedented crisis point is the result of a compounding failure to adapt, driven by both fierce external market forces and suffocating internal constraints.

Externally, the European automotive sector is facing a relentless onslaught. The transition to electric vehicles (EVs) has stalled domestically due to high energy costs and shifting consumer subsidies, leaving massive factory overcapacities. Concurrently, agile and heavily-subsidised Chinese competitors like BYD are producing high-tech, low-cost EVs that heavily undercut European alternatives. Combined with weak European consumer demand and shifting global trade dynamics, the traditional VW business model has rapidly become unsustainable.

Internally, management has historically been paralysed by structural gridlock. Backed by the unique “Volkswagen Act”, Germany’s powerful metalworkers’ union (IG Metall), influential works councils, and the regional government of Lower Saxony hold a combined blocking stake in corporate decisions. For decades, this set-up effectively barred management from adjusting headcount, optimising capacity, or closing inefficient facilities. While agile global competitors streamlined operations, Volkswagen remained tethered to legacy cost structures. With structural margins collapsing, the reality has finally broken through: entitlement to an uncompetitive status quo cannot survive market realities.

The crisis at Volkswagen is not a localised German problem; it is a macro-economic symptom that directly concerns the European Union as a whole and small, open economies like Malta. Europe cannot afford to operate under the illusion that its historical prosperity guarantees its future. When the industrial motor of the EU stalls, the ripple effects degrade supply chains, depress demand, and erode the collective economic leverage of the entire single market.

For Malta, a nation heavily reliant on foreign direct investment, both in the manufacturing and services sector, the lesson is acute. Small island states possess no natural margin for error; our only shield in the global economy is absolute, nimble competitiveness. However, looking at the trajectory of labour dynamics within the European Union highlights a stark reality regarding structural pricing and competitiveness across member states.

According to the latest standardised data from Eurostat (as per above), the average hourly labour cost across the Euro Area average climbed to €38.21 in 2025. However as shown above this means that while the average hourly labour cost has increased by 49% in the Euro Area between 2008 to 2024, in Malta the average hourly labour cost has increased by 68% during the same period.
With the labour market in Malta driven by acute labour shortages and a tight labour market, the operational wage baseline has trended steadily upwards. Rapidly increasing labour costs per hour, when decoupled from parallel leaps in productivity, present a direct threat to the country’s economic attractiveness. If it becomes significantly more expensive to employ a worker in Malta while productivity remains flat, international capital will simply look elsewhere.

Economic security cannot be legislated by decree, nor can it be built on a foundation of entitlement. Entitlement teaches us to demand the fruits of prosperity without maintaining the efficiency required to grow them. It fosters a dangerous complacency, convincing workforce representatives and policymakers alike that legacy success acts as a permanent shield against global competition.

Ultimately, our future can only be secured by unrelenting competitiveness. To survive in a world that moves at breakneck speed, Malta and the wider EU, must ruthlessly focus on innovation, fiscal discipline, productivity growth, and structural flexibility. We must foster an environment where productivity justifies wages. As the Volkswagen situation teaches us, no corporate giant is too big to fail, and no nation is too stable to decline. Ultimately, we all need to earn our place in the global economy every single day.

The post Our future can only be secured by competitiveness first appeared on The Malta Business Weekly.

Iran’s 2026 World Cup campaign was marked by resilience amid difficult circumstances, narrow elimination, and a strong narrative surrounding a lack of good fortune. Iran competed in Group G of the expanded 48-team tournament. Their results were a 2-2 draw against New Zealand (15 June), a 0-0 draw against Belgium (21 June), and a 1-1 draw against Egypt. They earned three points from three draws and finished third in the group. Despite the expanded format, Iran missed the Round of 32 on tiebreakers and other results. Still, one congratulates them for showing defensive solidity, although they were hampered by what many observers called poor luck. One remembers multiple VAR-overturned goals, with Iran having three disallowed goals, reportedly the highest number in the tournament, as well as marginal offside decisions.

Iran (team Melli) competed in Group G of the expanded 48-team tournament. Head coach Amir Ghalenoei publicly stated that it sometimes felt like “God was at odds with us” because of the lack of good fortune. Despite the exit, they earned praise for a resilient campaign, as the team certainly achieved an unexpectedly strong showing. On 21 June, they held Belgium, ranked ninth in the world, to a draw in Los Angeles, leaving them within reach of the knockout stages.

Meanwhile, in Switzerland, Iranian diplomats were negotiating the thorny Hormuz issues. Many agree they were achieving significant successes. There were further positive developments as the US Treasury Department issued a sanctions waiver permitting the production, sale, and delivery of Iranian petroleum for 60 days. The move will bring immediate relief to the Iranian regime and could, over time, make Iran a prosperous nation once again.

The team enjoyed a hero’s welcome upon returning to Iran at Mehrabad Airport in Tehran, with huge crowds, emotional scenes, children wearing jerseys, and players embracing fans. Captain Mehdi Taremi and stars such as Ramin Rezaeian tearfully apologised for not advancing but vowed success at the Asia Cup. The reception at home highlighted national pride and unity despite the disappointment of failing to progress. The team also thanked the people of Tijuana, Mexico, for their hospitality, calling Mexico a “second home”. Overall, Iran’s story was one of fighting hard but ultimately being undone by a combination of draws, bad luck, and external factors. It was not a triumphant success in terms of advancing, but rather a heroic campaign that resonated emotionally back home.

One cannot overlook the saga of the Strait of Hormuz, which has now resulted in the gradual liberation of oil tankers and provided some relief from ongoing geopolitical tensions. These tensions included Iranian regulatory and assertive actions, vessel seizures, warnings, and the gradual easing or release of tanker traffic amid a complex oil crisis. Readers are aware that the Strait of Hormuz is the world’s most critical oil chokepoint, with roughly 20-30% of global seaborne oil trade passing through it.

During this year, Iran established a Persian Gulf Strait Authority and demanded that vessels use approved routes, cooperate with Iranian authorities, and, in some cases, pay fees or tolls. There were incidents involving attacks or strikes on vessels, with drones and projectiles reported in some cases, although Iran and other parties attributed responsibility differently. This led to periods of slowed or disrupted tanker traffic, hesitancy among shippers, and, at times, effective restrictions or “virtual blockades”. Traffic flows declined following warnings or incidents before gradually recovering. Some vessels were released after periods of detention, negotiations, or compliance with Iranian conditions.

Following the slowdowns caused by Iranian warnings and the reassertion of control, tanker traffic has begun to increase again. Shipping reports describe traffic as “slowly picking up”, with normal flows gradually resuming. More encouraging news followed around mid-June, when an interim US-Iran understanding culminated in ships being allowed to pass without immediate charges for a 60-day period. As of late June, Iran reiterated that tankers must use designated Iranian-approved routes or face consequences, while rejecting proposals to waive tolls in exchange for the release of some frozen Iranian funds.

It is ironic that, while Iran’s team was playing its group-stage matches, US and Iranian negotiators were meeting in Switzerland and Pakistan to finalise the Islamabad Memorandum, a 14-point framework aimed at ending hostilities and reopening the Strait of Hormuz. The timing of the World Cup also meant that Iran’s football team became a symbol of soft power, national resilience, and international engagement. In short, football did not cause diplomacy – but it strengthened it at a critical moment.

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Malta possesses many of the ingredients needed to become a leading European business hub. The gap between its current position and its full potential lies not in geography, but in execution.

Singapore is one of the world’s most remarkable development stories. A small island nation of just 734 square kilometres – barely twice the size of Malta – with virtually no natural resources, it transformed itself into a global hub for finance, trade, technology and innovation. Today, its GDP per capita exceeds $100,000. Malta’s stands at roughly half that figure. The question worth asking is whether Malta could pursue a similar trajectory.

The comparison is instructive rather than exact. Singapore and Malta have different histories, geographies and political systems. Yet the parallels are compelling: both are small island states sitting at the crossroads of major trade routes; both rely on openness to international business; both have prospered by looking outward rather than inward. Singapore’s population of six million is nearly 10 times Malta’s 580,000 – yet both have demonstrated that size, when accompanied by strategic agility, can be a competitive advantage rather than a constraint.

Malta already possesses a strong starting position. English is widely spoken. The country operates within the European Union while maintaining a competitive tax framework. It enjoys political stability, a skilled international workforce and a strategic location linking Europe, North Africa and the Middle East. These are not trivial advantages. They are precisely the foundations on which Singapore built its success.

The execution gap

What distinguishes Singapore from its peers is not natural endowment – it has none – but the relentless quality of its delivery. Public services function efficiently. Infrastructure is maintained to a high standard. Regulatory processes are clear and predictable. Businesses can navigate administrative requirements without unnecessary friction. Investors notice these things. Entrepreneurs depend on them. International talent expects them.

Malta’s opportunity lies in closing what might be called the execution gap: the distance between its stated ambitions and the daily experience of doing business here. Road networks that remain congested, planning processes that lack transparency, digital government services that still fall short of best practice – none of these are insurmountable, but collectively they represent a drag on Malta’s competitiveness that no tax advantage can fully compensate for.

The prize for closing that gap is significant. According to the World Bank’s Doing Business indicators, the highest-ranked economies consistently attract greater volumes of foreign direct investment, command higher productivity and retain talent more effectively than their peers. Jurisdictions that combine competitive tax frameworks with efficient regulation do not merely attract more business – they attract better business.

Quality over quantity

The next phase of Malta’s economic development cannot rely simply on attracting more activity. It must focus on attracting higher-value activity. This shift is already underway in tourism, where policymakers are actively moving away from volume-based mass market strategies in favour of higher-spending visitors. The same logic applies across the economy.

The objective should be to deepen Malta’s position as a centre of excellence in financial services, technology, artificial intelligence, digital assets, advanced manufacturing, maritime services, professional services and international headquarters operations. Malta has established credible foundations in many of these sectors. The creative industries – including film production – represent a more recent addition to that portfolio. The task now is to build on these foundations with greater ambition and greater rigour.

To do so, Malta must continue strengthening its reputation for ease of doing business. Investors and corporations seek certainty above almost everything else. Efficient licensing, stable regulation, responsive public administration and a legal system capable of resolving commercial disputes quickly and fairly are not optional extras – they are the baseline expectation of any business destination that aspires to compete at the highest level.

Reputation as infrastructure

Singapore did not become a global business destination through tax incentives alone. It became one because businesses knew they could trust the environment in which they operated. That trust – built over decades through consistent, high-quality governance –functions as a form of infrastructure, as real and as valuable as any port or airport.

Malta has the opportunity to build the same kind of reputational infrastructure. The goal should not be to position Malta merely as a low-tax jurisdiction, but as a highly efficient one: a place where things work, where rules are clear, where commitments are honoured. That is a significantly more durable competitive advantage.

Personal security and quality of life are increasingly important factors in location decisions for both businesses and individuals. In an uncertain world, families, entrepreneurs and international professionals actively seek environments where they can build long-term futures with confidence. Malta can offer this. By investing further in public safety, urban regeneration, environmental quality and community infrastructure, the country can materially strengthen its appeal to the mobile international talent and capital it seeks to attract.

The case for long-term thinking

Achieving this level of ambition requires something that does not come easily in democratic systems: sustained commitment beyond individual electoral cycles. Infrastructure investment, regulatory reform, institutional capacity-building and reputation management are decade-long projects. They require political will that outlasts any single mandate.

This is not an insurmountable challenge. Many of the world’s most competitive small economies have achieved precisely this kind of continuity – through coalition-building, cross-party consensus, independent institutions or some combination of all three. Malta’s political culture will determine which mechanisms are most appropriate, but the need for long-term strategic coherence is not in question.

The global economy increasingly rewards countries that are nimble, efficient and internationally connected. Large nations often struggle to reform quickly. Small nations, if well-governed, can move with a speed and decisiveness that is simply unavailable to economies of continental scale. Malta has demonstrated this capacity for reinvention before – from maritime trade to financial services, from tourism to digital and creative industries. The next chapter of that story could be the most ambitious yet.

The question of will

No country can simply replicate another’s success. Singapore’s model emerged from a specific set of historical circumstances, political choices and cultural conditions. What Malta can adopt is not Singapore’s blueprint, but its animating principles: an unwavering commitment to competitiveness, a high standard of execution, and a clear-eyed understanding of what a small open economy must do to thrive in a demanding world.

The question, ultimately, is not whether Malta has the raw material to become a leading European business hub – it does. The question is whether it has the collective will to pursue that goal with the consistency and rigour it demands – investing in infrastructure, raising standards of public administration, strengthening institutions, and presenting to the world an image that reflects the quality of what Malta genuinely has to offer.

That ambition – a cleaner, safer, more efficient, more innovative Malta at the heart of the Mediterranean – is within reach. Closing the gap between aspiration and execution is the defining challenge of the next decade.

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Key comparisons: Malta vs Singapore

Land area: Malta 316 km² | Singapore 734 km²

Population: Malta ~580,000 | Singapore ~6 million

GDP per capita: Malta ~$52,000 | Singapore ~$100,000+

Both: EU/Commonwealth-linked, English-speaking, island trading nations at strategic maritime crossroads.

Maria Darby-Walker is a non-executive director and executive coach and mentor

The post Could Malta become the Singapore of Europe? first appeared on The Malta Business Weekly.

Over recent years, Malta has demonstrated a highly favourable shift in its fiscal metrics, characterised by declining general government deficit ratios, which are officially projected to reach 1.6% of gross domestic product in 2026. This significant fiscal consolidation marks a positive departure from the fiscal strains of previous years, allowing Malta to achieve an early exit from the European Council’s Excessive Deficit Procedure.

Alongside this improving deficit ratio, Malta’s public debt dynamics have remained strong and sustainable, with the debt-to-GDP ratio stabilising at 46.4% in 2025 and projected to decrease further to 45.8% in 2026. This performance stands in sharp, favourable contrast to the broader Euro area averages, where national deficits regularly exceed the 3% reference value and public debt levels hover near 90% of gross domestic product. Malta’s improving debt-to-GDP ratio is primarily underpinned by two simultaneous economic forces: a strong expansion in total tax revenue and substantial denominator growth driven by resilient nominal economic activity.

However, beneath these highly favourable headline statistics, the Malta Fiscal Advisory Council’s report raises crucial long-term analytical warnings regarding the sustainability and structural composition of Malta’s public finances. Over the past two decades, Malta’s fiscal revenue architecture has undergone a profound structural shift, becoming increasingly and disproportionately reliant on current taxes on income and wealth. This specific category of direct taxation, which incorporates both personal and corporate income tax streams, has rapidly climbed from representing approximately 25% of total fiscal revenue in the year 2000 to over 43% across the 2024 and 2025 periods. From an international comparative perspective, Malta now ranks among the economies with the absolute highest concentration of revenue derived from direct taxes, significantly exceeding both the European Union 27 average of 28%t and the Euro area average of 27%. This unique revenue concentration exposes public accounts to acute cyclical and structural vulnerabilities, as the State’s fiscal balance sheet has become heavily exposed to highly mobile, volatile, and internationally dependent economic variables.

Crucially, a granular examination reveals that this remarkable revenue outperformance is heavily driven by a marked surge in corporate income tax receipts, which accounted for approximately 41.7% of total current taxes on income and wealth by 2024. It is highly likely that this massive increase in corporate tax yields is heavily driven by international tax units and foreign-owned companies operating within Malta’s jurisdiction, attracted by the country’s highly competitive and favourable corporate tax framework. This influx of corporate tax windfall revenue has served as the primary financial catalyst enabling the government to fund, sustain, and continuously expand its public sector expenditure. Rather than executing expenditure restraint or strict cost-control measures, the public administration has utilised these abundant foreign corporate cash inflows to support an ever-increasing baseline of permanent recurrent public expenditure. This expanded government spending has, in turn, stimulated broad-based domestic demand, funded widespread public employment expansions, and increased local economic activity. This elevated level of public sector activity and direct spending has naturally exerted a strong upward knock-on effect on the domestic labour market, resulting in substantial wage growth and heightened employment rates that have directly generated an indirect increase in personal income tax collections as well. Consequently, Malta’s overall fiscal equilibrium has established a self-reinforcing, upward loop where foreign corporate windfalls fund expanded domestic public spending, which subsequently boosts local personal income tax yields and also boost economic growth.

Table 1: Consolidated Fund Performance Summary (January-May)

When tracking the cumulative performance of the Consolidated Fund for the period from January to May 2024, 2025 and 2026, one sees that the actual cash figures validate these deep structural observations, showing that total recurrent revenue expanded by a remarkable 17.2% in 2026 to reach over €3.52 billion during the first five months of 2026, compared with the same period in 2025. In perfect alignment with the revenue concentration thesis, more than half of this entire year-on-year revenue growth stemmed directly from a massive 21.7% surge in income tax collections, which provided an additional €261.4 million to the treasury. Simultaneously, however, expenditure pressures have accelerated at an equal pace, with total expenditure climbing by 17.4% to reach €3.70 billion, driven by a 13.1% rise in recurrent outlays and a massive 75.4% surge in capital expenditure related to energy infrastructure and EU fund absorption. Because this expenditure growth slightly outstripped even the buoyant revenue collections, the cash-based Consolidated Fund deficit widened by 21.9% to reach €177.9 million by May, while total central government debt rose to €11.84 billion. This operational reality illustrates that the ongoing fiscal regime remains entirely tethered to high revenue buoyancy to sustain its structural expansions.

Table 2: Central Government Debt Trajectory

Ultimately, when evaluated from a long-term strategic and risk-management perspective, anchoring the permanent structural solvency of the Maltese state to this specific fiscal arrangement introduces profound vulnerabilities. Expecting that Malta’s favourable corporate income tax regime for foreign-owned companies will remain unchanged and fully operational on a perpetual basis, constitutes an extraordinarily risky and unsustainable assumption for medium-term or longer term planning. Should external political and regulatory transformations or competitive pressures disrupt these international corporate income tax inflows, the financial foundation supporting Malta’s elevated public recurrent expenditure baseline could contract rapidly, leaving permanent spending commitments unmatched by local revenue streams and triggering severe structural imbalances in public accounts.

The post Malta’s fiscal trajectory first appeared on The Malta Business Weekly.