1. Business confidence
As far as the economy is concerned, 2018 promises to be a good year that is expected to continue in the current growth streak. Basing one’s projections on EY Malta’s Malta Attractiveness Survey, Malta is bound to remain an attractive country for investment, although this attractiveness in certain aspects is diminishing. The economy is also expected to grow, as more businesses are seeking to capitalise on numerous opportunities in a variety of sectors. In a recent Chamber-conducted survey assessing headline business indicators for 2018, businesses said that sales, exports, employment and investment appear to be on an upward trajectory as businesses are optimistic about their future.
Another recently conducted survey by the Malta Chamber carried out among its members concluded that businesses were ready to create around 3,000 jobs in the next three years. This positive sentiment augurs well for business in Malta, yet 2018 will certainly hold its own challenges which will require serious and thorough solutions.
2. Malta’s HR challenge and its ability to retain staff
Malta has one of the lowest unemployment rates in Europe, but it’s facing an employment crisis of a different sort – finding enough people to fulfil the roles that need to be filled. In 2016, Malta registered a net increase of 10,500 jobs over the previous year, a trend that shows no signs of abating, and employers are growing increasingly desperate to find people to fill crucial positions, leading to fierce competition, poaching of valued employees and price gouging, especially from foreign firms. Clyde Caruana, Chairman of Malta’s state employment agency JobsPlus, has stated that despite the fact that more than 20,000 foreign workers have come to the island over the past few years, even more are needed simply to keep the economy running. There is also the question of whether Malta is attractive enough for foreign workers to settle down permanently. According to employment statistics compiled by JobsPlus, the majority of foreign workers who entered in recent years ended up leaving the country relatively quickly, with less than a tenth of the thousands of foreign workers who arrived in Malta up to 2010 remaining on the island today. While temporary workers are good and necessary solutions for short-term projects, companies that are planning to build a permanent base in Malta will certainly not read this as good news.
3. Malta’s transparency and good corporate governance issues
The economy has reached new heights and the strong economic output can be felt across industries as well as within society at large. It’s an indisputable fact however, that no matter how well the economy has been doing, issues of transparency, whether real or perceived, require urgent addressing. Though the appetite for investment appears to remain healthy as our businesses continue to register optimistic traits, the country must also consider the sustainability of Malta's reputation as a legitimate business hub in the long term. In the present economic climate, the country must endeavour to dissipate any uncertainty. Any insecurity will, no doubt, impact business confidence negatively in 2018, and the country’s reputation in its various sectors. Malta must preserve its international reputation as much as it must safeguard good governance and stability. In order for these expectations to truly materialise, it is critical for the country to realise that good corporate governance is not an option.
4. Malta’s ability to keep up with regulatory changes
Malta’s nimbleness and agility when it came to emerging sectors such as igaming and financial services, transformed the economy in the early to mid-2000s, from one that was far too heavily reliant on tourism to the one we have today, where sophisticated tertiary services form the backbone of the economy. However, Malta’s ability to keep up with global regulatory changes seems to be losing some of its momentum in nearly all fields except for igaming. While igaming is crucial to Malta’s economy, generating more than 12 per cent of its annual economy, other sectors that require just as much focus cannot be neglected. Government has already announced plans to develop a sound regulatory framework for blockchain and FinTech, putting it ahead of other countries in this regard, but will this be enough to keep it ahead of the game, and has enough been done to lay the groundwork for the development of sustainable future industries? Only time will tell.
5. Malta’s tourism product
Malta is currently breaking record after record when it comes to tourism figures, and there’s no doubt that the marketing and promotional aspect is being handled with great skill, but unless stricter safeguards are placed upon Malta’s touristic offering, our sustainability might be at stake on a long-term basis. The proliferation of generic, unsightly buildings and the general overurbanisation of the country risk destroying Malta’s unique heritage, while the littered and overcrowded beaches will stop being so appealing unless swift action is taken. Furthermore, the HR problem that currently exists across all industries is particularly pronounced when it comes to sectors directly related to tourism, such as hotel and catering work – it’s harder than ever to find people who want to do an excellent job in such a tough industry. Finally, there’s the issue of Air Malta. It is encouraging to note that Government has maintained that the airline will remain one of the key pillars of Malta’s tourism industry. Details of how the fortunes of the ailing airline will be turned around are slowly emerging, boding well for the long-term sustainability of the airline that must be quickly ascertained for a successful economy in 2018.
6. Whether Malta will manage to update its ageing and outdated infrastructure
Malta’s population has risen by about 25,000 in the space of 10 years, boosted by expats who now live and work on the island. It’s evident that the current capacity of the present road network is just not enough to handle the huge flows of traffic, particularly to central areas of the island where hubs of industry and commerce are located. According to EY Malta’s Malta Attractiveness Survey, more than a third of respondents (36 per cent) believe that the current transport and logistics infrastructure is not attractive from an FDI standpoint, and 63 per cent supported investment in major infrastructure and urban projects. And with 43 new vehicles being added to Malta’s roads every single day, the situation is bound to get worse. The 2018 Budget focused heavily on ways to fix Malta’s infrastructure, with the €700 million, seven-year road project, which was a central tenet of the Labour Party’s electoral manifesto, scheduled to begin in 2019. A new agency which will be working hand in hand with Transport Malta will be set up to plan, oversee, and implement the development and improvement of the country’s road network, and an additional 25 projects on arterial roads and 160 residential roads are expected to take place over the next year. However, while it was acknowledged that the traffic problem will not be solved just through investment in better roads, and that the congestion problem could be attributed to a cultural dependence on private cars, there was no mention of the introduction of a rapid mass transport system.