The attraction of foreign direct investment (FDI) is a crucial objective for Malta that seeks to bolster economic development and global competitiveness. Several critical factors determine our ability to draw in FDI. Among these are the political, legal, fiscal and regulatory environment.
The EY Attractiveness survey for 2025, has some encouraging findings while also highlighting the challenges that persist.
The headline finding is that investor confidence in Malta has surged to its highest level in years. Seventy-nine per cent of FDI companies believe Malta is attractive for foreign direct investment. This marks a significant rise of 25% over last year’s edition.
No explanations were given as to what caused such a massive change in investors’ sentiment in just one year. Still, those who spoke during the EY conference expressed valid views on how we can optimise direct foreign investment by improving our strengths and addressing our weaknesses.
The president of the Malta Chamber of Commerce, William Spiteri Bailey, said the timing of this year’s event “has never felt so urgent” in the context of global trade fragmentation and Europe’s shift in industrial policy. He argued that Malta’s economic model must evolve “towards quality-driven, high value-added work” rather than quantity-based growth.
Unsurprisingly, investors see tourism, gaming, fintech and AI as the key growth areas. However, the shortage of specialised human talent remains a major stumbling block preventing Malta from maximising the potential of these industries.
EY Malta country managing partner Ronald Attard said: “There is a strong call for an overhaul of the education system. Competition for investment is intensifying, and Malta must ensure that its workforce remains equipped to meet future demands.”
The benefits of increased direct foreign investment will be limited if specialised foreign employees take over well-paid jobs, as our education system fails to provide enough graduates with the knowledge and skills demanded by modern industry. It is sobering to note that the survey indicated that Malta’s R&D and innovation environment, and its transport and logistics infrastructure, remain our least attractive FDI parameters.
The growing quality of life aspirations are becoming increasingly relevant not only for local workers. Conference participants hope that Malta will evolve into a country “where people want to work, live, relax, and create”, a green island that offers a high quality of life and safety alongside competitiveness.
Prime Minister Robert Abela and Opposition leader Alex Borg did not contradict any of the views expressed during the conference. Abela attributes Malta’s economic success to “the government’s decisions to implement progressive economic policies”.
Borg argued that Malta’s business community is still “asking for direction, clarity and leadership”, adding that there are signals that our economy has outgrown our infrastructure, our population is stretched, and our education system is not keeping up with our ambitions.”
The global business environment is evolving rapidly, and our current key attractiveness factors are at risk of being undermined. While investors identified skills shortage as the main threat to Malta’s future attractiveness, other risks must not be underestimated.
The looming OECD and EU-driven tax reforms, which are set to overhaul Malta’s favourable corporate tax regime and cost competitiveness, must nudge economic policymakers to identify new investment strategies.
Ultimately, what will determine whether Malta remains attractive to foreign investors is the ability of policymakers and the business community to implement the necessary reforms in education, business transformation and industrial and labour market policies.
There has been no shortage of what needs to be done to upgrade Malta’s economy. Managing the status quo is not an option.
We must take action to implement the necessary reforms.