If you are considering investing in Malta you are probably curious about the environment you will be subjected to—things such as the level of risk involved as well as the policies and regulations of a country play a major role in the success of any business. The following are some of the most important business facts about Malta you should know if you are considering to invest in Malta.
5 business facts about Malta every investor should know
The Banking and Financial Services Sector
Malta boasts of a well regulated banking and financial sector. The banks are supported by a strong local deposit base and unlike in other countries, the banking sector is not notably subject to foreign sovereign debt risks. The country’s five core banks hold assets of twice the Maltese GDP which is only half the EU average.
Banking clients in Malta can freely access both personal and commercial financial services from Malta’s numerous banking institutions, Malta has 5 retail banks and over twenty global commercial and trade banks. Recent trends have also seen many insurance companies choosing to domicile in Malta—thus Maltese banks are highly experienced in managing insurance company investment portfolios.
Malta has a long-standing culture rooted in democracy. The state is a democratic parliamentary republic which thrives from its high voter participation. The Prime Minister holds executive powers while the head of state is the President. Transfer of power is a smooth transition guided by the fair and open elections held regularly. The Labour Party and the Nationalist Party are the two main parties which contest in the elections.
The government’s role in keeping Malta attractive for foreign direct investment is very crucial. Parliament takes a very supportive stance towards developing the aviation and ICT industries as well as the financial sector. Government and opposition share the same vision when it comes to legislation and the financial sector regulations making a sudden shift of policy with respect to taxation and other related areas highly unlikely.
The Central Bank of Malta is part of the European System of Central Banks and also part of the Euro-system. This lets the Central Bank of Malta actively take part in preparation and decision making of the monetary policy within the Euro-system.
In order to maintain an environment suited to foreign investors, Malta participates in global trade organizations in order to keep its policies relevant and competitive. These include the European Union, Commonwealth, Council of Europe and the United Nations.
Malta is even considered to be one of the world’s most open economies within the EU. Its participation in international relations goes further much further than its European counterparts. The country has a strong relationship with the economic giant China. Over the years, the Maltese and Chinese jurisdiction have fostered strong economic relations. This has allowed investors in both countries to do business flexibly and with much ease.
Malta is considered one of the healthiest economies in the Eurozone. The 316 square kilometer island has a relatively small population and it also holds one of the least unemployment rates in the world. In 2017 it is reported that the nation registered one of the lowest unemployment rates in the Eurozone at just 4.2%.
Whilst a large number of countries are under the strain of financial crisises Malta boasts of a significantly low risk of a recession. One of the reasons behind this is Malta’s advantageous geographical location, between Europe and Africa. The country enjoys more than just the benefits of being in a transit route between the two continents. Both EU and non-Eu residents are very appreciative of the stable and competitive business environment offered by the Maltese jurisdiction. The government is in full support of financial institutions in Malta and continues to develop policies that can continue to sustain as a top destination for foreign investment from Europe, Africa, the Middle East, and Asia alike.
Despite lacking mineral resources, Malta has a very thriving GDP. One of the major contributors to Malta’s high GDP is the tourism sector. Due to wise planning and economic strategies, Malta also benefits from other sectors such as industry and agriculture—industry accounts for 23% of the GDP and agriculture 2% respectively. The largest contribution comes from service business entities in Malta and contributes about 75% of the nation’s GDP. Years of tending to policies that attract foreign investment and support an open economy have paid off in the growth of Malta’s GDP.
Malta is keen to keep growing and become more pronounced in all business landscapes. Aside from financial services other sectors which are also greatly valued by the Maltese jurisdiction include education, aviation, and maritime industry. The growth of these sectors will in turn fuel more business opportunities for investors and the state of Malta as well. The future holds large incentives from the export of high-quality products and services for Malta. For further details and insights into the Maltese business landscape, reach out to SIGTAX. Our team of expert consultants, accountants and lawyers is ready to assist you in every way possible and answer all the questions you might have!