I visited Malta twice in the early seventies, as a diplomat stationed in Rome, as the Pakistan Embassy in Italy enjoyed concurrent accreditation with Malta. I found it to be an attractive modern country. English is widely spoken. The Maltese are forward looking and progressive in their outlook. It has a moderate Mediterranean climate. Its population is under half a million. It has no international disputes. Its public debt is a relatively manageable 69% of GDP. This statistic compares favorably with that of many heavily indebted countries in the Euro zone such as Greece, Ireland, Portugal, Italy and Spain etc. Even the most economically stable country in the EU, Germany, is currently burdened with $2.8 trillion in debt, or 80% of its output. Malta’s income per capita is $25,000. Malta joined the European Union in 2004. The European Central Bank (ECB) controls monetary policy for the 17 members of the Euro zone. Individual members do not control the quantity of money circulating within their own borders. This healthy monetary stipulation means for Malta among other positives, that it has a low inflation rate. The S&P rating agency places it in the A/stable/ A-1 category while Moody’s gives it a rating of A-1.
While much larger EU countries such as notably Greece, Ireland, Portugal, Italy and Spain currently face serious financial problems which, because of the inescapable global ripple effect, are causing unease in major financial capitals, Malta’s economic indicators are stable. It’s insulation from the 2008 financial crisis has been attributed by economists to the stability of the Maltese banking system and to its risk management practices. Wittingly or unwittingly, the Maltese authorities seem to have largely followed the time tested advice given by Mr. Micawber to David Copperfield in Charles Dickens celebrated novel David Copperfield:
“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and in short you are forever floored. As I am.”
What should be of interest to foreign investors is that Malta is fast becoming a leading financial services center because it can provide a favorable investment platform through the following:
- Attractive fiscal policies; non resident shareholders enjoy low effective rates of Maltese tax as Malta’s full imputation system of taxation allows general unilateral relief and tax refunds.
- Stable economy
- An extensive double taxation treaty network
- Its membership of the EU brings with it a substantial advantage of EU protection. The adoption of the Euro has been a key factor in the rapid growth of Malta’s financial services sector.
- A central geographic location in relation to Continental Europe and North Africa. The good transport network and multilingual workforce make it an ideal hub for investment into and out of Europe.
- The support of the Maltese government and the Maltese Financial Services Authority (MFSA) whose approach is flexible, yet governed by strict compliance to EU and OECD standards.
The foregoing analysis suggests that Malta should be seriously explored as a viable avenue for profitable investment.