Malta: Country and Foreign Investment
Malta Wanted To Be In The EU . . . most of the time, anyway
Malta is an independent nation, having split from the UK in 1964. The Maltese Islands are 100 km south of Sicily, with a population of over 411,000; the climate is warm. Malta has a Westminster-style democracy, but has been politically fractious since independence. 15 years of post-colonial adolescent flirtation with Communism and the third world has however been succeeded by a more mature attitude.
Malta joined the EU in 2004, although as late as the spring of 2002, with EU accession negotiations almost completed, the opposition labour party was still hankering after a life as the 'Switzerland of the Mediterranean'. Eventually, Malta was invited to join the EU in December, 2002, along with Cyprus and eight Eastern European ex-Soviet states. A referendum in March, 2003, approved EU entry, and after the government was returned to power in April, it signed the EU accession treaty in Athens. Finally, the Maltese Parliament ratified the accession treaty in July, 2003.
The official languages are English and Maltese. The British military and naval base once dominated Malta but since 1979, when the British left, the excellent port facilities have not yet been fully re-utilised. Tourism has become a major contributor to the economy, particularly visits by cruise ships. The airport has good connections with a wide range of European countries. Figures for 2012 show GDP per head of USD27,500 which is low on the European scale and increases only slowly; for the same year inflation was at 2.4%; and unemployment at 6.4%.
As a politically-stable, English-speaking retirement destination, Malta has experienced a real estate boom, especially since joining the EU, followed by the adoption of the Euro as from 1st January 2008.
. . . but its long-term economic future is dependent on financial services.
Almost entirely lacking energy or other natural resources, and with a severe shortage of arable land, Malta is inevitably an import-hungry country. In the last 15 years, the Government has tried hard, and with some success, to create a high-technology manufacturing sector and to establish processing and distribution facilities around its rapidly growing Freeport. There are extensive investment incentives.
Manufacturing, tourism and shipping go some way towards paying for imports, but the gap cannot be closed without the development of a financial services sector. Maltese legislation for banking, mutual funds, insurance and trust services was relatively late in arriving, and while these sectors are growing, they are not on the scale of some other OIFCs. Malta has moderately high internal taxes, but offers low-tax regimes to companies and individuals. Malta phased out its 'designer tax' Offshore Companies, which the EU would never have accepted, and in 2006 had to give in to the EU by legislating away their replacements, the International Trading Companies.
There is a reasonably sophisticated business and professional infrastructure. Business sectors with offshore activity include banking, investment fund management (there is a stock exchange with a growing array of mutual fund listings), trust management, shipping (a particularly strong sector) and investment holding.