Executive
Summary
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 400,000; 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 8 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. GDP per head of $21,300
is low on the European scale and increases only
slowly; inflation is at 3.4%; unemployment at
3.9% has fallen from much higher levels.
As
a politically-stable, English-speaking retirement
destination, Malta has experienced a real estate
boom, especially since joining the EU, and adoption
of the euro as from 1st January 2008 can only
intensify a spiral of increasing prices which
has led to some of the highest property values
in Europe.
. . . 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.
As a result there will have to be changes to the
general tax regime.
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.
Malta
may be home to a World Trade Centre as its application
for membership of the World Trade Centres Association
(WTCA) was accepted in March 2001. World Trade
Centres provide crucial support services to international
businesses such as temporary office accommodation,
secretarial and translation services, corporate
training, meeting and exhibition facilities. The
government has stated that it sees the establishment
of a World Trade Centre as 'an additional and
very important step in the promotion and development
of Malta as a principal hub for trade in the Mediterranean
region.'
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