Malta’s attractiveness to foreign investors declining; international reputation part of problem

Last Updated on Tuesday, 20 October, 2020 at 2:54 pm by Andre Camilleri

Investors sounded a note of caution on Malta’s overall Foreign Direct Investment (FDI) attractiveness, with a 15% decline when compared to 2019, The EY’s 2020 Attractiveness survey has shown. This is the largest decrease ever recorded, and the number of investors who said Malta is not attractive has also increased and now comprises a quarter of total respondents.

In 2019, 77% said Malta was attractive, while 15% said it wasn’t. In 2020, 62% said Malta is attractive while 25% said it wasn’t. The rest responded ‘don’t know’.

Among one of the more worrying factors that emerges through the survey is Malta’s damaged international reputation, which is a concern to many of the companies.

 “This year, Malta’s overall index has dropped by 15%, the largest decrease ever registered. The number of investors who said Malta is not attractive has also increased and now comprises a quarter of total respondents. Respondents emphasized the country’s waning international reputation and the need to improve on governance as crucial aspects for this decline,” The report read.

The survey was presented on the first day of a four-day event hosted by EY called ‘Future Realised Malta 2020’. 

Malta’s political, legal and regulatory environment

The stability and transparency of Malta’s political, legal and regulatory environment which, until 2015, ranked in second place with 85%, has seen a sharp decrease of 27% in a single year and this parameter now occupies last place on the FDI attractiveness scoreboard, the survey read.

19% said Malta’s stability and transparency of the political, legal and regulatory environment was attractive, 31% said it is neither attractive nor unattractive, 48% said that it is not attractive and 1% said it is not relevant to them.

“This result reflects the sentiments shared by many of the FDI investors on the need to improve governance and tackle reputational issues. The Council of Europe’s MoneyVal assessment was frequently mentioned by respondents as a cause for concern.”

Ronald Attard, EY Malta managing partner stated that foreign investors have clearly underlined the country’s need to prioritise tangible reforms that lead to increased trust based on good governance. “This year’s findings are crucial as we overcome the short-term COVID-19 challenges and begin our strategic quest to look beyond. Our weaknesses are not set in stone. If reputation and governance deficiencies are robustly addressed, the stability of our political, legal and regulatory environment can once again move up our attractiveness scoreboard.” He highlighted that investors still appreciate Malta’s social fabric, its strong telecoms infrastructure and talent pool, and that COVID-19 has highlighted that the island may be more connected – digitally – than ever before.

Rounding off the bottom three of Malta’s least attractive parameters are the Research and Development and Innovation environment (24% finding this attractive, 34% finding it neither attractive nor unattractive, 18% finding it not attractive and 25% saying it is not relevant to them) and transport and logistics (25% finding this attractive, 25% finding it neither attractive nor unattractive, 36% finding it unattractive and 13% saying it is not relevant for them).

As in previous years, corporate taxation remained top of the attractiveness scoreboard (82% found this attractive, 11% found it neither attractive nor unattractive, 5% found it unattractive and 1% said it is not relevant for them). Rounding of the top three most attractive parameters were the Telecommunications Infrastructure (68% found this attractive, 23% found it neither attractive nor unattractive, 4% found in unattractive and 6% said it was not relevant for them) and the Stability of the Social Climate. The attractiveness of Malta’s Stability of Social Climate has decreased by 11% over the previous year, and is now in third place with 64% finding this attractive, 27% finding it neither attractive nor unattractive, 6% finding it unattractive and 3% saying it is not relevant for them.

Supporting what many highlighted as one of the main reasons for a decrease in Malta’s overall attractiveness index in 2020, FDI investors ranked a new inclusion, Reputation and Brand, as the number one priority for Malta to remain globally competitive. “Malta’s long-standing priority, education and skills, is now in second place after several years ranking first. Another new inclusion, strengthening institutions, enforcement and monitoring, is in third place. This result further underlines the country’s need to prioritize tangible reforms that lead to increased trust based on good governance. Other priorities include infrastructure, transportation and planning, developing new economic sectors, and environmental, social and governance matters.”


The survey addressed the Covid-19 pandemic and its effects on Malta’s attractiveness.

The survey found that almost two-thirds of companies have been negatively impacted due to the pandemic, and the same number believe it will take a year to return to pre-Covid-19 levels.

Respondents were also asked how attractive Malta would be in a post Covid-19 world. “Almost two-thirds expect the island to be equally attractive, 20% believe it will be less attractive and 15% said more attractive. When comparing these results with the EY Europe Attractiveness Survey 2020, it seems FDI investors in Malta are more positive than their continental counterparts with half stating Europe would be less attractive post Covid-19.”

 “A remarkable side effect of the pandemic worldwide is the shift toward remote working, with 77% implementing it for their staff.” The survey found that 99% of these companies adapted quickly to these new practices, the majority (53%) have not seen an increase in productivity, while 31% did. “68% plan to adopt remote working for the long term, while 18% will reduce office space as a result of this new way of working.”

In response to the pandemic, half of businesses completely froze recruitment. “So far, only 4% of foreign-owned companies have laid off staff as a result of the pandemic, but half have completely frozen recruitment. 23% have started upskilling and re-skilling, while around one-fifth have placed staff on leave.”

Almost all FDI investors have indicated that, as part of its Covid-19 reboot strategy, the Maltese Government should prioritize environmentally sustainable practices (94%).

Respondents were asked about the government’s handling of Covid-19. “When the interviews were carried out in June 2020, almost all respondents had a positive (91%) assessment of the Maltese Government’s health care crisis response. Only 2% viewed it negatively and 7% were neutral in their assessment of the response. Respondents provided their views again in late September, and the number of positive replies decreased to 26% as both the neutral (48%) and negative (26%) replies increased.

In terms of the Covid-19 support measures, the EY survey explained that although two-thirds viewed the support measures for businesses positively (61%), one-third saw them as either neutral (30%) or negative (9%) in September. The sectors that provided the most positive replies included manufacturing (77%) and hospitality (75%). The negative replies originated from other financial services (13%) and iGaming (13%). ICT and telecommunications (56%) recorded the highest amount of neutral replies, followed by iGaming (40%). Respondents indicated delays as one of the challenges for these support measures.

The next five years

Notwithstanding the tourism-related crisis which was brought about by the pandemic, survey respondents still believe tourism and leisure (66%) will be the leading business sector in the next five years. iGaming (56%), formerly first, is now in second place with a slight decline from the 2019 result


55% of respondents believe that Malta is an attractive start-up location.

Down by 4% in a single year and down by 7% since 2018, Malta as a start-up location could use a little bit more attention according to investors, the EY’s survey report read. When asked which startup sectors Malta should prioritize, investors “sent a strong message to focus on technological sectors with FinTech (30%), AI and big data (28%), digital business (25%), and biotech and pharma (20%) topping the list.”


While the outlook for iGaming is still by and large positive, leaders highlight reputational issues and the forthcoming Moneyval evaluation as two critical areas impacting Malta’s attractiveness. “On the plus side, Malta’s iGaming ecosystem of operators and suppliers, coupled with its strong and reputable regulatory framework and its attractive fiscal regime, continue to make Malta the leading international location for iGaming activities,” EY said. “The ongoing drive of EU countries to regulate the sector at a national level is, however, eroding some of Malta’s competitive advantages from a licensing perspective. Clear articulation of the 5-10-year vision for the sector may support new investment and the further build-out of enabling infrastructure.”

Reshaping the global economic landscape

Ronald Attard said that COVID-19 has reshaped the global economic landscape, with many companies looking to bring back operations and production closer to home. He suggested that there may be an opportunity for Malta to act as a niche nearshoring hub for western Europe and that Malta should exploit the presence of a strong gaming hub to nurture innovative and an entrepreneurial spirit in other industries. “Malta should look towards growing digital technology sectors such as health (MedTech), education (EdTech), e-commerce and digital logistics solutions when considering where to focus. There may also be an opportunity to develop a plan for Gozo that is centred around sustainability and eco- tourism, while the blue (marine) economy could be a focal point for research activities, given that we are an island nation.”

Attard stressed the importance of expanding safety nets where gaps exist to ensure the most vulnerable are protected and that companies hard hit by the pandemic can remain afloat in the near-term. He noted that investments in health, digital infrastructure, green infrastructure, and education can help Malta achieve productive, inclusive, and sustainable growth.

Future Realised week is taking place between 20 to 23 October 2020, with four 90-minute sessions lined-up. Three former European Prime Ministers and Presidents and speakers from the World Bank, World Economic Forum, United Nations and the European Commission, together with global technology and artificial intelligence gurus from Microsoft, Nvidia, SAP and senior global leaders from EY offices in London and New York will address the virtual conference. They will be joined by local business leaders, academics and NGOs to drive home a discussion on how to build back better as the country emerges from the crisis. The Malta Independent Editor-in-Chief Neil Camilleri will moderate the event on Wednesday, when it will also be live-streamed on The Malta Independent’s website and Facebook page. To register visit

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