EY-attractiveness-survey-malta-2015-lr

EY’s attractiveness survey
Malta 2015
Malta: open for
business

In this report
EY’s attractiveness surveys
EY’s attractiveness surveys are widely recognized by our
clients, the media and major public stakeholders as a
key source of insight on foreign direct investment (FDI).
Examining the attractiveness of a particular region or
country as an investment destination, the surveys are
designed to help businesses to make investment decisions
and governments to remove barriers to future growth.
A two-step methodology analyzes both the reality and
perception of FDI in the respective country or region.
Findings are based on the views of representative panels
of international and local opinion leaders and decision-
makers.
For more information, please visit:
www.ey.com/attractiveness
04—09
EY vision
46—51
Future
14—17
European
attractiveness
survey 2015
62
Methodology
22—27
FDI: facts at a
glance
10—13
Executive
summary
52—61
Areas of action
18—21
Malta in context
63—65
EY in Malta
28—45
Perception

Acronyms
CBA – Cost benefit analysis
CEO – Chief executive officer
CRD IV – Capital Requirements Directive IV
EAS – European attractiveness survey
ECB – European Central Bank
EMEIA – Europe, Middle East, India and Africa
EU – European Union
FCO – Financial controller
FDI – Foreign direct investment
GDP – Gross domestic product
ICT – Information and communications technology
IFDIS – Institute of Foreign Direct Investment Studies
IMF – International Monetary Fund
IoT – Internet of things
IP – Intellectual property
IPR – Intellectual property rights
JEREMIE – Joint European Resources for Micro to Medium Enterprises
LSP – Life Sciences Park
M&A – Mergers and acquisitions
M2M – Machine-to-machine communication
MAS – Malta attractiveness survey
MCAST – Malta College of Arts, Science and Technology
ME – Malta Enterprise
NSO – National Statistics Office
PPP – Public-private partnership
R&D – Research and development
SME – Small and medium sized-enterprise
SSA – Sub-Saharan Africa
UK – United Kingdom
US – United States

EY vision: beyond
this economic
horizon
We are doing quite well
In January of this year, we kicked off our second decade as
members of the European Union. Away from the political white
heat of a decade ago, we can now look back and dispassionately
assess what has been achieved so far.
Although our economic growth rate has rollercoastered
somewhat over the last decade, we have not only weathered
the global financial crisis admirably but came out of it stronger
than ever. Today we have a very healthy growth of close to
3.5%, while real GDP per capita has increased by 20% in the last
decade. Taking a similar up-and-down path, the national debt as
a percentage of the gross domestic product (GDP) has, of late,
been declining year-on-year.
Our balance of payments as a percentage of the GDP went from
8.2 in the red ten years ago to 3.4 in the black this year. Closer
to the very heart of this report, foreign direct investment has
increased by almost 17 times in the last decade.
Between 2005 and 2014, real private consumption, rose from
€3,633.4 million to €4,132.4 million. Over the same period, the
number of people in employment increased by almost 30,000
while unemployment has been steadily going down since 2010.
Today we have one of the very lowest unemployment rates in the
European Union (EU). Over the last few years, company profits
and bank deposits have been on the rise. And between 2004 and
2014 the average household disposable income rose by about
13% in real terms.
This is a quick glance at the big, decade-long economic picture
which, on balance, is quite a positive one. Taking a couple of steps
closer to the picture reveals other interesting trends that shed a
bright light on the way forward.
Ronald Attard
Country Managing Partner, EY Malta
EYvision
4 EY’s attractiveness survey Malta 2015 Malta: open for business

Over the same period, the services sector spiked from 72.7
to 82.7 as a percentage of the GDP. At the same time — and
perhaps not surprisingly to most — manufacturing and industrial
production lost almost 4 and 5 percentage points respectively.
Clearly, in these two areas, global and local competitiveness
issues are taking their toll. Today, a handful of very large
companies are responsible for most manufacturing activity on the
island.
Evidently, the physiognomy of our economy is changing and all of
us stakeholders, in the public and private sectors, need to change
with it. Even this closer look at the economy, however, does not
do justice to the real picture of the last decade.
The tourism sector has witnessed strong growth and is the largest
direct contributor to Malta’s GDP. This is apart from the ripple
and indirect contributions that this increase brought with it.
Certain sectors — literally created from scratch through political
consensus and effective legislation — have grown exponentially
and taken a life of their own. The shining examples are, of course,
financial services, iGaming, the film industry and the development
of the maritime industry which now account for a significant
amount of Malta’s GDP. Like tourism, they have a knock-on effect
on many areas of the economy.
A note of caution
Clearly, all of these sectors have become integral and crucial parts
of our economy. But allow me today to sound a note of caution.
None of them are immune to domestic and global challenges. As
we have seen, some elements of manufacturing in Malta have
already succumbed to the pressures of global competitiveness.
Albeit for completely different reasons and in different ways, the
same might happen to financial services, iGaming and shipping.
If anything, by the very nature of these sectors and the world we
live in, the challenges and threats to them might catch up with us
quicker than ever before. Let me elaborate.
Cost increases are the downside of a flourishing economy.
The more economically successful we become, as almost
full employment becomes an economic fixture, our cost
competitiveness could possibly suffer. To be clear, I am not
suggesting that better pay packets and conditions must
necessarily undermine competitiveness. The two are not mutually
exclusive. My point is that we need to keep a careful eye on
the underlying pressures which are driving costs upwards.
Respondents to this survey highlighted that the availability of
skills has become an issue. We need to better understand the
areas where bottlenecks in the supply side exist and undertake
actions to address them. This cannot be done without the close
cooperation between policy makers, the private sector and
educational providers.
A vision beyond this horizon
As always, the how is the hardest question to answer. Perhaps as
a general rule we should focus more sharply on increasing labor
supply where it is most needed and doing so in closer alignment
with the requirements of the higher valued-added and knowledge-
based sectors. In addition, we should be more focused on being
at the cutting edge of technological developments that enhance
our competitiveness. Many women have the education to fill the
skills gap. Increasing female participation rates must remain a
sustained national priority. As a small country, we should be able
to quickly adapt educational programs to required current and
future skill profiles.
Yet our vision needs to be even wider if we are to sustain our
competitiveness and make our economic well-being as future-
proof as possible. This is not merely a matter of not sitting on
our laurels. It is one of clarity about the potential fragility of our
current economic and financial situation.
The key issue is this. Operators in the thriving sectors — from
iGaming to game development to asset management, and many
more — are all much more physically mobile than at any other
time in our foreign investment history. As in the past, these
foreign investors are here almost exclusively because we offer a
better financial proposition compared with other countries.
5EY’s attractiveness survey Malta 2015 Malta: open for business

We therefore need to strive to build a healthy and robust eco-
system for these new industries to increase their stickiness, and
drive long-term attractiveness.
As our survey has confirmed, what delivers this to them is our
legislation, social and political climate, stability and other factors.
Yet the operators in today’s successful sectors, unlike their
ancestors in manufacturing, incur much lower costs if they
have to pack up and leave for a better financial and economic
climate. They just unplug their server — assuming that it is here
— turn off the office lights, put their key personnel on a plane
and start operating somewhere else the next day. Of course, in
practice it may not be so simple but it is easier than relocating a
manufacturing plant.
In this new reality, the choice to move operations is wider than
ever before and it would be foolish for us to ignore it. It is true this
year’s survey shows that more current investors believe that they
will continue operating in Malta in the foreseeable future. Yet this
confidence can evaporate unless we keep a close eye on what is
happening around us.
This issue also needs to be put in the perspective of the small
size of our economy. When a sector becomes successful in Malta,
it quickly gains relative economic dominance. As a result, the
more vulnerable that dominant sector is to continental and global
market forces, the bigger is the threat to our economic and
financial stability.
Furthermore, while technology and globalization have helped to
liberate our country from our tiny size and geographic fate, and
thereby opened up new markets for us, this is a sword that cuts
both ways. Just as our opportunities in the global market have
been widened, the sources of threats to our economy have also
increased.
Today, our competitors for foreign investment are from near and
far. From long-standing EU members, such as in certain sectors
of the regulated financial services market, to late accession
countries with lower labor costs but with high educational levels
in other areas. When it comes to back-office operations, including
regulated ones, game development, data warehousing, research
functions and others, we really are in competition with the whole
world.
In this light, the central double bind comes clearly into view.
The more operators in the currently successful sectors such as
iGaming and financial services we attract, the more vulnerable to
outside market forces our economy becomes. The more we try to
nurture up-and-coming knowledge-based sectors as we must, the
more this vulnerability increases.
On another level, although evolving technologies and industries
are opening up new markets for us, we remain an island and with
the dimensions of a small, secondary mainland city. The size of
our labor force, particularly those with training, has a natural
ceiling. We import everything and we still have to face the fate
of all those who colonized us over the last two thousand years.
Malta is a great place to live in but you cannot transport beyond
it on land. We are 1840km away from Brussels, 690 from Rome
and 340 from Tripoli. As if these natural barriers did not make
us peripheral enough, we put up unnatural bureaucratic ones.
From importation and its ancillary costs, to other bureaucratic
procedures. There are still a number of things that could be done
for today’s and tomorrow’s investors.
EY vision
This is the reality we are living as the future beckons. What is
to be done? As a general strategy, I propose three objectives
to be pursued in tandem. First, in order to continue liberating
ourselves from the limits set by size and geography we should
persist in exploring new high-value added, knowledge-based
sectors and niches in them. At the same time, we should seek
more opportunities that arise precisely because of our size. These
efforts should help us decrease our economic vulnerability and
dependence on the existing small number of thriving sectors.
Secondly, we should never let up in our efforts to be at the cutting
edge of technological developments. This is not simply a call to
use technology to do what we already do differently and better.
What I have in mind is to think of technology as a way of doing
things we never did before.
Thirdly, we need to incentivize new labor supply sources in areas
where there simply are not enough Maltese workers. We are
already being increasingly successful in bringing more women
back to the labor market. In addition, a number of schemes have
been successful in attracting highly skilled workers to fledgling
industries.
“This is not simply a call to use technology to do
what we already do differently and better. What I
have in mind is to think of technology as a way of
doing things we never did before.”
EY vision

With these objectives as foundations, I wish to make six concrete suggestions for discussion and implementation:
Conclusion
Clearly, Malta has been doing well and there is every reason to be
optimistic about the future. To keep sailing beyond the present
economic horizon we need to be “open for business” in a variety
of ways — new ways of doing business, new sources of investment
and more innovative ways of enhancing our labor supply.
We, at EY, are glad to be spearheading this drive with six concrete
and realistic suggestions. Our sincere hope is that our vision will
be shared by public and private sector stakeholders alike.
“We at EY are glad to be spearheading this drive with
six concrete and realistic suggestions. Our sincere
hope is that we shall be joined by public and private
sector stakeholders who share our vision.”
1
2
3
4
5
6
Malta can take a lead in regulating online financial
services (FinTech). These can take the form of
crowdfunding, peer-to-peer lending and similar
platforms. At present, there is no pan-European
legislation on these services and Malta can do what
it did with online gaming a decade ago — take a
lead in regulation in Europe. If we are serious about
this, we need to think and act quickly. The UK is
already moving in this direction through its financial
services innovation hub. There may be a small time
window in which to offer an alternative regime.
Our country can be turned into a commodities
trading hub by building on existing attractive
features and making sure we are the best in the
area. This may include regulating certain activities
and developing a global trader type of program.
Here we might want to look at what Singapore is
doing.
Malta can truly become a logistics hub if it ensures
that it has the best legal infrastructure in Europe.
To get there we would need to look at duty,
customs, clearance processes, costs (particularly
government-induced), and ways of stimulating
capacity subject to state aid rules. Rotterdam might
be a model to look at.
Our small country can become a hub for Asian
e-commerce by making it the key Mediterranean and
European destination for goods sold online in Asia
for distribution to businesses and end consumers all
over Europe.
New technology is now the main driver of more
efficient, comfortable and faster transport. Malta
could implement, or support the implementation
of, best-in -class, web-enabled solutions in parking
management, transport sharing and tracking. Of
course, I do realize that this is tricky because our
infrastructure remains an issue and regulation alone
is not enough.
There is one untapped source of labor that risks
becoming a drain on finances when it could be
contributing to further economic growth. Currently,
irregular immigrants arriving on our shores are
either languishing in detention centers or being
employed illegally in the underground economy.
Malta could take a path-breaking step by surveying
their skills, imparting new ones to them and turning
them into productive employees with dignity,
rights and obligations. Simultaneously, the ban
on irregular employment of immigrants should be
strictly enforced.

Viewpoint
There are plenty of
statistics to show that
the Maltese economy is
performing well. Malta
is at the top of the
league for growth in the
European Union. The
economy is expanding
and the unemployment
figure is at a historic low,
a shade over 5%. All the
forecasts for the coming
months are favorable.
Hon. Dr. Joseph Muscat
Prime Minister of Malta
There are plenty of statistics to show that the Maltese
economy is performing well. Malta is at the top of the league
for growth in the European Union. The economy is expanding
and the unemployment figure is at a historic low, a shade over
5%. All the forecasts for the coming months are favorable.
This is good news for Malta and its people. It is also good news
for investors who are looking for a place to do business.
My government has been in office for only two and a half
years but in that time we have carried out fundamental
reforms to encourage enterprise and prosperity. A shake-up
in the energy sector has meant a 25% cut in electricity tariffs
for businesses this year, which has improved the bottom line
of all companies. Free child care has allowed companies to
retain talented female staff and we are fading out welfare
dependency in favor of personal enterprise and reward. Ours
is a dynamic can-do society.
We are always looking to do better. We want to open up new
sectors in addition to nurturing what we have. We are cutting
red tape and offering incentives to people to come to Malta to
do business. And we listen to what business says, so that we
can react to their concerns and needs.
I would encourage anybody thinking of investing in Malta to
talk to those who have traveled the road before you. No doubt
they will have experienced some frustrations along the way
but they are our best salespeople, telling the story of why
Malta is the place where businesses succeed.
Every time I attend the opening of a new business, or the
expansion of an existing one, it gives me great pride. I look
forward to attending many more.
We are moving
forward

Malta’s attractiveness for FDI
Eighty-four percent of executives surveyed think that
Malta is attractive for FDI. This is an increase of five
points over the findings from our 2014 survey.
Respondents from the financial service sectors tend to
be more optimistic about Malta’s current attractiveness,
with manufacturing respondents having the lowest
rating among different sectors.
Yes No Don’t know
2011 2012 2013 2014 2015
91%
86%
88%
79%
84%
6%
3%
11%
3%
9%
3%
15% 11%
6% 5%
Source: all MAS 2011–15 respondents.
Top executives from existing FDI
companies in Malta were requested to
respond to various national and country-
specific FDI-related questions for EY’s
Malta attractiveness survey (MAS).
Many of the areas considered are similar
to other national and pan-European
attractiveness surveys conducted by EY.
Various attractive features
Stability of social climate and stability and transparency
of the political, legal and regulatory environment
are the top two ranked Malta FDI parameters for
respondents.
Transport and logistics infrastructure, domestic or
regional market and RD and innovation environment
are considered to be the least attractive FDI parameters
in Malta.
Executivesummary
Stability and transparency
of political, legal and
regulatory environment
22% 63% 85%
Corporate taxation 32% 43% 75%
20% 70% 90%
Stability of
social climate
Very attractive Attractive
Malta’s most attractive FDI parameters
Source: all MAS 2015 respondents.
RD and innovation
environment
19% 2% 21%
Domestic or regional
market 17% 4% 21%
24% 8% 32%
Transport and logistics
infrastructure
Not attractive Not attractive at all
Points for improvement

The most important FDI parameters:
MAS vs EAS
Fifty-nine percent of respondents ranked the stability and
transparency of the legal, political and regulatory environment
as one of the top three parameters their companies took into
account when deciding on a location in which to establish
operations. This was followed by corporate taxation (50%) and
local labor skill levels (48%).
The flexibility of labor legislation and the level of protection
of intellectual property rights (IPR) were among the least
important factors that decision-makers considered.
Respondents to EY’s European attractiveness survey seek
transparency of the legal, political and regulatory environment
(46%) and the country’s or region’s domestic market (37%). The
quality of transportation and logistics infrastructure has become
the third most important factor in choosing a location (30%), up
five points and two places in the ranking.
50%
corporate taxation
37%
country’s or region’s
domestic market
30%
transportation and
logistics infrastructure
48%
local labor skills
Source: all MAS and EAS 2015 respondents.
46%
59%
MAS vs EAS FDI parameters
stability and transparency
stability and transparency
Driving Malta’s growth in the future
Fifty-five percent of companies surveyed have some form of
expansion plans in Malta over the next year.
Expansion plans in Malta over the next year
55%Yes
22%
Can’t say
24%
No
Expansion
plans in Malta
Note: does not add up to 100% due to rounding.
iGaming into the future
Sixty percent believe that iGaming will be the business sector
driving Malta’s growth in the next five years. This was followed by
the fund administration and asset management sectors (at 43%
and 41%).
Presence in 10 years’ time
71%
to be present in
Malta
201559%
2014
The number of companies that intend to be present in
Malta in 10 years’ time has risen by 12% from 2014 to 71%.

Malta: open for business
The entities that are considered to be most open to business
include the central government (65%) as well as the regulatory
authorities (61%).
The country’s legislative framework is also looked at relatively
positively from this point of view.
Very open
Open
Central
government
50%
15%
General
public
40%
2%
Local
authorities
2%
25%
11%
CourtCivil
service
13%
Regulatory
authorities
11%
50%
Legislative
framework
49%
4%
Openness for business
Improving local labor market’s skills
Companies are investing in knowledge transfer through
experience, training or both. Eighty-two percent of the
companies surveyed are willing to invest in training to
develop skills, needed either through offering internships
and vocational training or through financial help and
sponsorship. It seems that the demand for skilled
labor is outstripping supply. Forty-seven percent of the
companies surveyed report that they are able to find
the required specialized skills in the local labor market.
Filling these skills gaps is a necessary prerequisite for
around 52% of those considering expansion plans.
Malta’s legislative framework offers an
international competitive advantage
It is reassuring to note that the Maltese legislative framework
is seen to create a strong competitive advantage in both the
European and global markets, with this proportion increasing by
a full 8% to 59% in this survey. However, it must be noted that the
“no” replies also increased by 3% to 32%.
Availability of
specialized skills
82%
7%
11%
Willingness to
invest in training
Managing to retain
specialized personnel
85%
15%
47%
53%
Yes No Other
+ 8 points
59% + 3 points
32%
Malta’s legislative framework offers
an international competitive advantage
Yes
No
Executive summary

Innovation
The reforms required for sectors to become leaders in innovation
included reducing bureaucracy (67%), improving education and
training in new technologies (49%) and the development of a
culture of innovation and creativity (47%).
Malta’s standing as a regional hub
Respondents were asked if Malta’s standing as a regional hub
is being affected by developments in the Mediterranean basin.
Twenty-eight percent believe that Malta’s standing as a regional
hub in their sectors is gaining ground by ongoing developments;
nearly 17% believe that it is losing ground and just under 40%
believe that it is staying the same.
Areas of action
affected by developments
Losing17%
Staying the same
39% Gaining28%
Focus on learning
2
Exploiting our
geographic location
4
Plugging the infrastructure
gap – physically and digitally
6
Staying in the race
and winning
1
Manufacturing is
not dead
3
Defying geography
digitally
5
Open for business –
really
7
67%
Reducing
bureaucracy
49%
Improving
education and
training in new
technologies
47%
Developing
a culture of
innovation and
creativity
Reforms required to become sectoral
innovation leaders

EY’s 2015 European
attractiveness survey:
comeback time
EY’s European attractiveness survey measures FDI in
terms of projects initiated and jobs created, and reveals
the perceptions of more than 800 decision-makers across
Europe.
Europe revives as global FDI falters
Global FDI flows fell by 8% in 2014 with the fragility of the
global economy, policy uncertainty and geographical risks
being the factors that held back a worldwide investment
recovery. Flows to transitional economies including Brazil
and Russia more than halved.
Flows into developing economies reached a new high point
of US$704 billion, up 4%, as increases in Asia made up for
decreases in Africa, Latin America and the Caribbean. The
19% surge in cross-border MA shows strength in business
confidence.
Meanwhile, Europe bucked the trend, with
strong FDI inflows
FDI inflows into Europe (excluding Russia) rose by 36%
in 2014, the biggest spike among significant regions.
Europe’s US$305 billion of investments accounted for
24% of global FDI, 7% more than in 2013. Inflows to the
EU rose by 13% but remained at only a third of their 2007
peak level.
By country, China came out as the world’s principal FDI
recipient, driving the US into second place.
Europeanattractivenesssurvey2015
Percentage change in 2014 from 2013 FDI (US$b)
Sources: UNCTAD, Global Investment Trend Monitor, January 2015.
North America
Transition economies
Latin America and the Caribbean
Africa
EU
Developing Asia
Europe
-54%
-51%
-19%
-3%
13%
15%
36%
2014
24%
Share of FDI (US$b)
2013
17%
31%
17%
4%
15%
7%
24%
39%
21%
4%
11%
3%
10%
European attractiveness survey 2015

“Western Europe (50%) was
ranked as the world’s most
attractive FDI destination.”
North America becomes Europe’s challenger
For the second time, Western Europe (50%) was ranked
as the world’s most attractive FDI destination. The region’s
attractiveness for investors has gone up by five points since 2014
and by 17 points since 2008, and is now posting three years of
sustained improvement. Western Europe is on course to regain its
55% pre-crisis level of attractiveness.
Europe as a whole is seen as increasingly attractive as investors
transfer their preference from China and Russia. China is
rebalancing its economy from investment to consumption, a move
that is accompanied by a managed slowdown. Investors who
ranked China as the most attractive destination for establishing
operations in 2012 and 2013 rank it third in 2015, with 38% of
the responses.
North America is the new challenger for investors’ attention, as
it makes use of cheap energy that is contributing to a growing
economic recovery and a more bullish business outlook.
Investors see a brighter future
This year, 59% of the investors believe that Europe’s
attractiveness will improve in the next three years. This is five
points more than in 2014 and 21 points more since 2012.
The attractiveness of Northern Europe has risen by five points
since 2014, and by three points for Western Europe. On the other
hand, the appeal of Central and Eastern Europe, at 28%, has gone
down by 14 points since 2008.
North America has gone up one place, relegating China to second
place in the FDI attractiveness ratings. Its attractiveness reached
its pre-crisis peak of 38% this year, after reaching a low of 21% in
2012.
Europe’s attractiveness on the rise
How do you think Europe’s attractiveness will evolve over
the next three years?
Source: EY’s 2015 European attractiveness survey (total respondents: 808).
59%
2015
of investors see
improvement54%
2014
39%
201338%
2012
Percentage of investors who see Europe’s attractiveness improving
Source: EY’s 2015 European attractiveness survey (total respondents: 808;
established in Europe: 638; not established in Europe: 170).
52%
55%
The most attractive regions to establish operations
Investors within and outside Europe have different opinions
Established in Europe Not established in Europe
Since 2014, China’s attractiveness has fallen six points to 38%, as
international businesses incur higher operational expenses due to
wage increases. India (18%) and Brazil (14%) are resilient and
each registered a one percentage improvement in attractiveness
as opposed to 2014.
Investors established in Europe rank Western Europe (55%) as
the most preferred destination to set up operations, followed by
China(37%). But investors not present in Europe prefer North
America(52%) and China (40%) to Western Europe (30%).

The stability and transparency of the
political, legal and regulatory environment
have become an overriding priority for
companies weighing where to invest.
+3 points
in attractiveness quotient in 2015
46%
Risk aversion benefits Europe
Geopolitical events across the globe have raised investors’
concerns. The stability and transparency of the political, legal and
regulatory environment have become an even more overriding
priority for companies weighing where to invest, rising three
points to 46% this year. Accessing markets, pointed out by 37% of
investors, is also crucial.
Europe’s strengths match the qualities investors seek. The
region is known to have improved the stability and predictability
of its business environment (49%, +5 points). Attractive
investment opportunities for businesses are put forward by its
big market(31%) and purchasing power (19%). According
to 31% of respondents, the sixth most important factor in
investment location labor skills is Europe’s fourth most attractive
feature. Investors already set up in Europe appreciate its skills
more highly than those who lack European experience. For
investors not established in Europe, its market (32%) and high
purchasing power (25%) are more attractive than Europe’s labor
force(24%).
Investor perceptions mirror reality
The number of projects attracted to London in 2014 grew, albeit
modestly, to 383. Greater London still draws many more projects
than Greater Paris, its closest challenger. In terms of jobs, the
region of Catalonia was an easy winner, pulling in a number of big
projects that will employ a total of 7,089 workers.
The largest increase in number of projects between 2013 and
2014 occurred in Berlin.
Source: EY's Global Investment Monitor, 2015.
Top 10 urban areas by projects
Berlin trails London and Paris in the FDI stakes – but is catching up Share of FDI
Share FDI jobs projects
Urban area Country 2013 2014 (2014) Change (2014) in country
Greater London UK 380 383 9% 1% 3,470 43%
Greater Paris France 173 159 4% -8% 1,200 26%
Darmstadt (Frankfurt) Germany 94 124 3% 32% 1,316 16%
Catalonia (Barcelona) Spain 85 108 2% 27% 7,089 47%
Düsseldorf Germany 105 86 2% -18% 1,649 11%
Rhone-Alpes (Greater Lyon) France 56 83 2% 48% 1,592 14%
Uusimaa (Helsinki) Finland 89 83 2% -7% 197 85%
Berlin Germany 25 80 2% 220% 1,595 10%
Stuttgart Germany 80 74 2% -8% 982 10%
Freiburg Germany 79 68 2% -14% 268 9%
Others - 2,791 3,093 71% 11% 166,225 -
Total - 3,957 4,341 100% 10% 185,583 -
European attractiveness survey 2015

“Eighty-five percent are confident
of Europe’s ability to return to
sustainable economic growth.”
Outlook: unleashing confidence
Fifty-nine percent of investors are confident about Europe’s
prospects in the upcoming three years. Indeed, 85% of those
interviewed consider that Europe will be back to sustainable
economic growth, evidence of investors’ confidence. Only 32% of
investors have plans to establish or expand operations in Europe
over the next year, while 64% do not.
Foreign investors see bureaucracy (20%) and slow economic
growth (17%) as the biggest flaws in Europe’s attractiveness,
overshadowing the geopolitical unrest at Europe’s frontiers
(11%) and big deficits (10%). The big trends that business
leaders believe will drive European renewal — the digital, health
care and energy transformations — take decades to build
momentum, but nonetheless, they want to catch those waves.
Optimistic …
Conﬁdent …
Hesitant …
Wary ...
38%
2012 2013 2014 2015
Expectations of Europe’s attractiveness over the next
three years continue to improve
85% are conﬁdent of Europe’s ability
to return to sustainable
economic growth
64%
do not have plans
to establish or expand
operations in Europe
over the next year
believe that the biggest
threat to Europe's
attractiveness
is bureaucracy
Source: EY’s 2015 European attractiveness survey (total respondents: 808).
1
2
3
4
59%
20%
Powering growth: how to get there
Implementation of business-friendly
reforms in competition, tax and labor
markets in the EU are called for by
almost half of the total respondents.
They also wish for a lighter regulatory
burden.
Established investors, who face red tape
on a daily basis, are especially keen on
business-friendly reforms, while non-
established investors require closer EU
political integration. This is a secondary
issue for those investors already
present on the continent.

Malta in context
The Maltese archipelago, made up of Malta, Gozo and
Comino, covers a total area of 316km2
. Located 93km
off the southern coast of Sicily and 290km north of the
shores of North Africa, the country has a shoreline of
200km. Malta is the largest island and has a population
of 425,484 inhabitants. The sister island, Gozo, is home
to approximately 31,000 inhabitants while Comino is
largely uninhabited.
Maltese and English are the national and official
languages. Most Maltese speak both languages fluently
and a substantial number also speak Italian. Since Malta
joined the EU in 2004, its laws and regulations have
been gradually aligned to reflect the EU’s legislation
and directives. Consequently, in addition to having
a legislative structure that facilitates the conduct
of business in, or from, Malta, it provides foreign
investors with the assurance of the quality, security and
consistency synonymous with the EU. As a result of
reductions in transaction costs and international trade
barriers and the adoption of the euro in 2008, Malta
became even more attractive to foreign investors. Malta
joined the Schengen Area in 2007.
Investing in Malta
The island offers international investors a highly
advanced telecommunications network, a pool of skilled
professionals and a strategic location at the heart of the
Euromed region in the middle of the Mediterranean Sea,
between large European and North African markets.
Compared with other Western European countries,
Malta provides better cost advantages and easier
access to national and local authorities due to the size
of the local market. The favorable investment climate is
second to none, with business-friendly legal structures,
access to European markets and good opportunities
for networking. The potential recovery of North African
economies in the near future, coupled with various
reforms in the major sectors, will certainly continue to
boost market opportunities for companies operating
from Malta.
Maltaincontext
Undoubtedly, Malta is passing through a
period of well-earned economic stability
and the Malta Chamber of Commerce,
Enterprise and Industry is actively promoting
the idea of investing the proceeds of this
relative prosperity into ascertaining future
competitiveness. Cognizant of the rapidly
and constantly changing world, the Malta
Chamber is actively working toward the
fruition of its 52 concrete recommendations
listed in its Economic Vision 2014–20. The
measures address what the country needs
to make the quality leap forward, crucially
staying ahead of the curve, and to ensure that
it is open for business. To this end, the Malta
Chamber is privileged and honored to have
collaborated with EY for several years in its
annual conference on the Malta attractiveness
survey, as it considers the survey and the
conference as important tools for designing
Malta’s future economic growth.
Viewpoint
Anton Borg
President,
Malta Chamber of
Commerce, Enterprise
and Industry
Malta in context

1 European Commission - Spring economic forecast (2015), pg.100 http://ec.europa.eu/
economy_finance/eu/forecasts/2015_spring/mt_en.pdf
2 International Monetary Fund (2015), http://www.imf.org/external/np/sec/pr/2015/pr1575.htm
“The island offers international investors a highly
advanced telecommunications network, a pool of
skilled professionals and a strategic location at the
heart of the Euromed region.”
Today and tomorrow
The European Commission’s spring economic forecast indicates
that the “main drivers of projected growth over 2015 and 2016,
similar to 2014, are projected to be investment, benefiting from a
number of large-scale construction and energy projects, EU fund
absorption (mostly in 2015), and private consumption, on the
back of increasing disposable incomes and favorable consumer
sentiment.1
”
The June 2015 issue of the EY Eurozone Outlook for Malta,
published on a quarterly basis in collaboration with Oxford
Economics, highlights that the Maltese economy is expected to
grow by 3% in 2015. This is significantly higher than the Eurozone
average (projected at 1.6%).
The report also indicates that this rate is driven mainly by robust
consumer spending, buoyant tourism, large-scale investment
in energy infrastructure and a pickup in goods exports. The
combination of low unemployment combined with strong revenue
growth enabled consumer spending to rise by 3.2% in 2014,
the fastest pace in more than 10 years. Furthermore, the report
highlights that private spending is expected to grow by a solid
2.5% during 2015.
The EY Malta attractiveness survey is an important
stocktaking exercise. For Malta to be open for business,
we need good governance and a long-term vision
for high value-added sectors. And while it is good to
grow our economy, the higher objective must be an
economy for the people, to build a fairer society.
Viewpoint
Dr. Simon Busuttil
Leader of the Nationalist Party
of Malta
These positive findings were also backed up by the International
Monetary Fund (IMF) following its Article IV consultation with
Malta in February 2015. The IMF outlines that: ”Malta’s economy
continues to weather the global crisis well. Spillovers from turmoil
in international financial markets have been contained due to low
reliance on external financing by the government and banks. Real
GDP growth has been one of the highest in the Eurozone since
the beginning of the crisis, supported by relatively diversified
exports, a recent recovery in domestic demand, and a stable
banking sector.” On the other hand, the IMF sounds a note of
caution by saying that although “the economic outlook is robust,
challenges remain, and policies should aim to strengthen fiscal
sustainability further, maintain financial stability and enhance
competitiveness.2
”

The EY Eurozone Forecast indicates that in the first quarter of
2015, tourist arrivals rose by 7.7% on the previous year. This
growth in the tourism sector has led to a turnaround in the
current account balance, from a recurring deficit up to year
2011 to a surplus of 8% of GDP in 2014. Furthermore, the report
highlights that visitor numbers are expected to grow robustly
during the year. The strong tourism flows will continue to support
the household sector in Malta, mainly in terms of employment,
wages and consumer spending. The report highlights that goods
and services exports will grow by close to 4% in 2015 — following
a 0.2% drop last year — reflecting the weaker euro and successful
recent efforts by authorities to diversify the goods export base.
Other sources, such as the Central Bank of Malta, suggest that
private investment, aside from expenditure on energy-related
investments, is anticipated to be broadly stable in 2015 and to
accelerate in 2016 when underlying investment in machinery is
expected to pick up.3
Although government revenues have risen strongly in recent
years, the EY report calls for more reforms to ensure the financial
viability of public finances. In fact, in July 2014, Malta adopted a
National Health Systems Strategy plan that will run to 2020. The
key aim is to improve the efficiency and long-term sustainability
of public health spending.
It also suggests that greater competiveness in services, mainly
in tourism and financial services, is required to maintain
competitiveness and sustain steady long-term growth. The higher
demand in the Eurozone, together with lower oil prices and lower
interest rates, will boost consumer spending power and business
confidence. This may ultimately lead to higher prospects than
forecasted.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Malta GDP vs Eurozone GDP 2010–19
GDP, real, annual growth (%)
Source: Oxford Economics 2015.
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Malta Eurozone
3 Central Bank of Malta Quarterly Report 1 (2015), pg.82, http://www.centralbankmalta.org/
quarterly-review
Malta in context

Forecast for Malta by sector
Annual percentage changes in gross added value
2014 2015 2016 2017 2018 2019
GDP 3.5 3.0 2.5 2.1 1.8 1.8
Manufacturing -2.2 -1.4 1.7 1.9 1.8 1.8
Agriculture -3.0 1.1 0.8 0.5 0.2 0.2
Construction 3.0 -0.1 3.3 1.9 1.9 1.9
Utilities 9.5 0.3 2.3 1.7 1.1 1.1
Trade 7.1 -0.7 1.5 1.2 0.8 0.8
Financial and business services 2.4 1.3 3.3 2.8 2.3 2.3
Communications 11.5 2.5 4.5 3.9 3.3 3.3
Non-market services 9.7 2.0 2.3 2.0 1.8 1.8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Inﬂation Malta vs Eurozone 2000–15
Inﬂation, consumer price index — % year-on-year
0.0
1.0
2.0
3.0
4.0
5.0
Malta Eurozone
“Growth in the tourism sector has led to a
turnaround in the current account balance, from a
recurring deficit up to 2011 to a surplus of 8% of
GDP in 2014.”

FDI:factsataglance
FDI trends
in recent
years
p.24 FDI momentum sustained …
p.25 Malta’s stock position
p.26 FDI flows
p.26 FDI in Malta and abroad
23

FDI momentum
sustained …
This section outlines the main developments in Malta in 2014
from an FDI perspective. The two main information sources are
Malta Enterprise (ME), Malta’s national investment agency, and
the National Statistics Office (NSO).
ME 2014 data includes only project proposals in respect of which
the corporation’s board approved a package of incentives under
the Business Promotion and Malta Enterprise Acts. Projects that
fall outside of the scope of these two laws do not, as yet, feature
in ME’s published statistics, even though ME may have had a
leading role in making them happen.
A case in point is the Barts and The London School of Medicine
and Dentistry project. This was the first of what is expected to
be a series of ME’s initiatives aimed at attracting to Malta world
standard teaching and research institutes seeking a presence in
the region. Other ongoing initiatives that commenced in 2014
include projects in the field of medical and health tourism.
It must be borne in mind that “projects” represent only part
of ME’s work. New projects and expansions require supporting
initiatives that are hardly ever reported. During 2014, for
example, ME worked very closely with MCAST to establish a
Composition Materials Workshop. This specialized workshop is
now fully operational and is addressing the training requirements
associated with composite materials that are typically used in the
aviation services sector.
2014 was a critical year for the Life Sciences Park (LSP).
Projects to be located at the LSP, and so far approved, will
however feature in 2015 data.
Also during 2014, ME and MCAST cooperated to ensure a supply
of qualified human resources for Malta’s digital games industry
(not to be confused with iGaming). ME is also playing a key role
in planning the institutional and infrastructural conditions of an
integrated logistics system.
Source: Malta Enterprise.
4
FDI project applications approved by Malta Enterprise 2006–14
New FDI Foreign expansions
Year
Projects
approved
Average
investment
per application
(€m)
Average
employment
per application
Average
investment
per employee
(€)
Projects
approved
Average
investment
per application
(€m)
Average
employment
per application
Average
investment
per employee
(€)
2006 24 1.19 51 23,284 17 2.43 43 56,653
2007 25 1.84 39 46,843 11 1.00 31 32,544
2008 13 1.67 40 41,892 9 0.83 16 53,571
2009 12 4.79 54 88,598 6 4.48 50 90,572
2010 2 0.16 58 2,783 2 4.10 73 56,552
2011 9 14.43 44 325,564 6 3.48 43 81,323
2012 2 1.05 19 55,263 10 2.37 22 106,757
2013 36 1.78 33 53,461 15 2.83 22 127,246
2014 28 1.33 37 35,369 15 3.66 39 92,749
FDI: facts at a glance FDI trends in recent years

4 (http://www.maltaenterprise.com/sites/default/files/doing_business_in_malta_2014.pdf) and other Malta Enterprise statistics
5 http://www.maltaenterprise.com/en/media/news/2014/malta-places-2nd-quality-fdi
6 IBM Institute for Business Value (2014), Global Locations Trends 2014 annual report, pg. 5
7 Stock position refers to the balance sheet position of FDI- related items at the end of the period. The position incorporates exchange rate changes, valuation changes and other changes apart from the
transactions carried out during the period
8 Special purpose entities are companies that, although set up in a specific country, have little or no operations in the country, and have no, or a small number of, employees. However, since they are
registered in the country, they are regarded as resident units.
“Malta ranked in second place
worldwide for the quality of
foreign direct investment that it
attracted in 2013.”
Malta Enterprise has also indicated that health-related
investments5
were the fastest growing FDI sector over the last
year. It also shows that precision engineering and niches requiring
a high degree of digital creativity are considered to be “thriving.”
In this respect, the largest number of investments by sector were
in the areas of pharmaceutical and medical devices (5) and
professional and scientific activities (5). Investments in the areas
of ICT, digital games, waste management, aviation and other
manufacturing were also reported.
Moreover, Malta ranked in second place worldwide for the quality
of FDI that it attracts by the IBM Global Location Trends Report
(2014), which takes into account the FDI projects approved
during 2013.6
Source: NSO 2015.
Foreign direct investment in Malta − stock position: economic activities
Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14
€m €m €m €m €m €m €m €m
Manufacturing 832 894 809 800 861 889 985 878
Transportation,
accommodation and
real estate activities
1,032 1,028 1,040 1,074 1,102 1,133 1,159 1,135
Financial and
insurance activities
106,839 112,711 118,858 124,037 128,582 130,965 133,918 139,096
Information and
communication
-27 -35 35 34 21 28 25 34
Professional,
scientiﬁc and
technical activities
321 297 344 348 367 372 379 291
Other activities 282 301 280 258 292 332 338 489
109,278 115,195 121,365 126,551 131,225 133,721 136,804 141,927
Malta’s stock position
NSO statistics show that Malta’s FDI stock position7
(outward FDI
investments) was estimated at €141.9 billion as at December
2014. Up to 97.9% of this relates to financial and insurance
activities, which also include special purpose entities.8
This amounts to an increase of €8.13 billion over the
corresponding period in the previous year. It should be noted that,
for the first time, statistics quoted for FDI in Malta as from 2008
onward incorporate special purpose entities.

FDI flows
FDI in Malta and abroad
The stock position of direct investment abroad by resident
enterprises was estimated at €36.7 billion, as at December 2014.
Both inward and outward investments stock positions have seen a
constant increase over the past years.
Source: NSO News Release 155/2015.
Note: figures may vary due to rounding.
2011 2012 2013 2014
€m €m €m €m
Manufacturing 138 -78 101 38
Transportation, accommodation and real estate activities -6 48 55 67
Financial and insurance activities 11,121 9,580 7,209 6,883
Information and communication
Professional, scientific and technical activities
-16 676 -8 9
-109 -8 13 9
Other activities 36 -45 55 10
11,234 9,351 7,322 7,018
Foreign direct investment flows in Malta
Main FDI public announcements 2014–15
Shanghai Electric Power
A €320 million investment deal was concluded through
which the Chinese energy company Shanghai Electric
Power took over a 33% stake in the Maltese national energy
provider (Enemalta) and a 90% stake in an existing power
plant (BWSC) that will operationally be converted from
heavy fuel oil to gas.
Barts and The London School of Medicine and
Dentistry
Queen Mary University of London has signed an agreement
with the Government for the setting up of the Barts and
the London School of Medicine and Dentistry in Gozo, the
first fully fledged Barts campus outside of the UK. The
agreement envisages the construction of medical school
facilities in Gozo to house 300 international students by
year five from start-up. Barts is one of the oldest and most
prestigious British medical schools. The campus will benefit
from the radical upgrading of the Gozo General Hospital,
close research links with ME’s Life Sciences Park and the
development of an RD biomedical cluster in Malta and
Gozo.
Private hospital in Smart City (March 2015)
The Government announced that a new 200-bed private
hospital will be built at Smart City by a new investment
company having Maltese and Italian interest plus Johnsons
and Johnsons as strategic partners. The claim is that the
investment is to be a multimillion one and will operate mainly
in the field of orthopaedics.
Huawei Technologies (July 2015)
On the strength of a memorandum of understanding
with the Government of Malta, Huawei Technologies has
committed itself to start testing 5G technologies in Malta.
The testing forms part of Huawei’s five-year plan, which was
started in 2013 to invest US$600 million globally in research
on mobile phone networks.
Publicannouncements
FDI: facts at a glance FDI trends in recent years

Viewpoint
Foreign direct investment continues to be central to
Malta’s economic development strategy and, therefore, it
continues to be critical to Malta Enterprise’s mission. Over
the last year we achieved very significant successes. While
we have broadened the geographic and sectorial scope
of our field of operations, we have continued to refine our
microtargeting methodology (no to blind blanket media
campaigns, yes to approaching specific potential direct
investors with specific requirements).
Of course, this approach required a radical upgrading of
our ability to gather and analyze concrete and specific
intelligence (as opposed to the sort of news-making but
insufficiently granular data of the sort generated by global
rankings — good for the media and politics but not quite
what investors need).
We are now proud to have become the best in this field
in Malta and certainly among the best in Europe. To
underscore our commitment to serious research, later this
year we will announce the setting up of Malta Enterprise’s
Institute of Foreign Direct Investment Studies (IFDIS),
a project that will see us partnering with important
international players.
Dr. Mario Vella
Executive Chairman, Malta Enterprise
FDI: broader
scope, focused
targeting
Malta Enterprise leverages Malta’s location advantages
in a broad range of engineering-based niches, in the
more creative niches of information and communications
technology (including synergies between ICT and the life
sciences), in higher education and training for regional
and European markets, in innovative niches within aviation
services, in the creative industries generally and the long-
neglected field of international logistics in which we cannot
simply be satisfied with having a vibrant marine Freeport.
To this end, Malta Enterprise is leveraging the excellent
reputation we have built in the world of shipping; we
are, after all, Europe’s largest flag register and one of
the world’s fastest growing ones. We are also leveraging
Malta’s tradition of medical excellence and its historical
reputation as “the nurse of the Mediterranean” to develop
it as an international medical and health care hub.
We are now proud to have
become the best in this field
in Malta and certainly among
the best in Europe.

Perception
Stability
driving
confidence
p.30 Malta’s perceived FDI
attractiveness on the rise
p.36 Remaining attractive in the
face of global competition
p.38 Legislative framework
p.41 Focus on human capital
p.42 A competitive edge in
the European and global
markets
p.42 Malta’s standing as a
regional hub
p.43 This year’s focus: Malta
open for business
p.45 Reforms needed for Malta
to become an innovation
leader in different sectors
29

Malta’s current attractiveness for foreign direct
investment (FDI)
2011 2012 2013 2014 2015
Yes Don’t know
No
91%
86%
88%
79%
84%
6%
3%
11%
3%
9%
3%
15%
11%
6% 5%
Malta’s perceived FDI
attractiveness on the rise
Eighty-four percent of investors surveyed this year believe that
Malta is an attractive destination for FDI, a 5% increase on the
2014 findings. Correspondingly, there was a decrease in “don’t
know” and a slight decrease in the “no” responses. In the context
of the continued instability in the Mediterranean region, this
growing certainty is encouraging.
Investor confidence broken down by sector is also suggestive.
Respondents from the financial service sectors tend to be more
optimistic about Malta’s current attractiveness, with 92% of
banking and all insurance respondents rating the country as
attractive for FDI.
On the other hand, only two thirds of manufacturing respondents
believe that Malta is currently attractive for FDI, the lowest rating
among different sectors. This has been a recurrent trend in recent
years.
Perception Stability driving confidence

Malta’s FDI attractiveness in the next three years
2011 2012 2013 2014 2015
Yes Don’t know
No
71%
58%
63%
52%
56%
23%
6%
34%
8%
35%
2%
44%
41%
4% 3%
“Fifty-six percent of respondents
think that Malta will be attractive
for FDI in 3 years’ time, a 4%
increase on 2014.”
Data on prospective attractiveness is as significant as information
on current attractiveness. Fifty-six percent of respondents think
that Malta will be attractive for FDI in three years’ time, a 4%
increase on 2014. The number of negative respondents is fairly
minimal, with just 3% believing that Malta will not be attractive
in three years’ time. Predictably, the highest number of outright
no’s came from the manufacturing industry. Of some concern is
the fact that 41% of the decision-makers surveyed did not answer
this question. Significantly, 61% of ICT, telecommunications
and iGaming respondents, the largest sectoral cohort, did not
respond.
These figures might be reflecting current trends in the Maltese
economy. In particular, although both financial services and
iGaming continue to perform strongly, there are increasing
concerns that the advantages offered by Malta in certain sectors
are being eroded. This could be due to a number of factors
including increased competition from other European and
non-European jurisdictions, local market supply limitations (for
instance, a steady pipeline of the right human resources) and an
increasing cost base and regulatory structure.
Nevertheless, respondents are generally upbeat about Malta’s
stable political, economic and regulatory institutions, its social
climate and corporate taxation regime. The reasons that have
traditionally attracted investment to Malta, including these as well
as others such as ease of access to key decision-makers, English
being a national language and cost competitiveness in various
areas, continue to remain pluses for existing investors.

Viewpoint
Our economy was capable of sustaining the upturns and
downturns that were experienced globally over the last few
years. Testimony to this is Malta’s success in maintaining
a high level of employment and economic growth, both of
which are the envy of other European countries.
The banking sector in Malta is a main contributor to this
success, supporting the country’s main economic sectors
through the responsible granting of credit.
The Maltese banking sector’s conservative approach in
the undertaking of business turned out to be one of the
crucial factors enabling the country to emerge practically
unscathed from the financial turmoil that severely tried
most European countries.
The current international economic scenario places even
more pressure on key players to meet, or rather anticipate,
market expectations. Bank of Valletta’s corporate
governance and its prudent approach to the bank’s
balance sheet have always been strategic priorities. This
has proved fruitful, as we reported a common equity Tier
1 ratio, calculated on a CRD IV basis, at 11.8% and its total
capital ratio at 14.3%, and loan-to-deposit ratio of 52%.
For Bank of Valletta, the customer remains the fulcrum of
operations, harnessing technology and expertise, while
branching out into new areas such as investments, wealth
management, trade finance and self-service banking.
Positioning itself as the bank of choice for SMEs, the BOV
JEREMIE financing package was the first initiative enabling
SMEs to benefit from EU-funded guarantees. To date, it
remains a best practice example of how to implement an
EU-funded financial instrument.
Charles Borg
CEO, Bank of Valletta plc
Supporting
the Maltese
economy
The Maltese banking sector’s
conservative approach in
the undertaking of business
turned out to be one of the
crucial factors enabling the
country to emerge practically
unscathed from the financial
turmoil that severely tried
most European countries.
Conscious of our responsibility to support the Maltese
economy, we shall continue to embrace corporate
governance and innovation as the two main pillars of
the management of our business. Building on such solid
foundations, we shall remain leaders in supporting the
sustained and sustainable growth of the Maltese economy.
We urge all key local stakeholders to do likewise.

This positive outlook is reflected in the attractiveness scoreboard.
Modeled on the one used for EY’s European attractiveness
survey, this scoreboard gauges confidence across a number of
key investment parameters among investors wishing to expand,
develop or retain their investment in any jurisdiction.
11%
7%90%
Stability of social climate
Stability and transparency of political, legal and regulatory environment
Corporate taxation
3%
85% 10% 4% 1%
75% 14%
1%
1%
1%
Potential productivity increase for your company
66% 27% 5% 2%
66% 20% 13%
Local labor skills level
Telecommunications infrastructure
Labor costs
Flexibility of labor legislation
Level of protection for intellectual property rights
RD and innovation environment
Transport and logistics infrastructure
Domestic or regional market
65% 20% 11% 4%
58% 32% 9%
44% 36% 19%
39%
28%
27%
26%
35%
36%
29%
32%
11% 15%
21% 15%
32% 12%
21% 21%
Very attractive and attractive Neither attractive nor not attractive
Not attractive and not attractive at all Not relevant
Attractiveness scoreboard — Malta’s FDI attractiveness

“There continues to be a good fit between what
foreign investors see as attractive to them and what
they see as the features that make the country
attractive for investment.”
Geopolitical events across the globe have raised investors’
concerns. It is therefore encouraging to see that Malta
consistently garners high scores on the stability stakes, year
after year. The stability of social climate is once again the FDI
parameter that most respondents find attractive in Malta, rising
5% from 2014 to 90%. The stability and transparency of the
political, legal and regulatory environment moved up to second
place, with 8% more respondents deeming this factor to be
attractive (85%) than last year (77%). It is worthwhile to note
that 75% consider taxation to be an attractive parameter, down by
9% from 2014.
On the other hand, 32% of respondents believe that Malta’s
transport and logistics infrastructure is not attractive. In the
same vein, 21% believe that the domestic market and the RD
and innovation environment are not attractive FDI parameters. It
is important to point out that a number of respondents feel that
these parameters were not relevant to them (at 12%, 20% and
15% respectively). This could infer that other FDI parameters
have brought and kept them here. The scoreboard closely mirrors
the results obtained in 2014.
Stability and transparency
22% 63% 85%
Corporate taxation 32% 43% 75%
20% 70% 90%
Stability of
social climate
Very attractive Attractive
Malta’s most attractive FDI parameters
RD and innovation
environment
19% 2% 21%
Domestic or regional
market 17% 4% 21%
24% 8% 32%
Transport and logistics
infrastructure
Not attractive Not attractive at all
Points for improvement

“Efforts to maintain a fair, firm and friendly
regulatory regime will complement the drive to
maintain and improve Malta’s FDI attractiveness.”
Respondents were also asked to rate the attractiveness
parameters in order of importance to their own company.
Stability and transparency of the political, legal and regulatory
environment ranked at the top, with corporate taxation coming
in second. This matches two of the parameters that respondents
find attractive in Malta from an FDI perspective. Hence there
continues to be a good fit between what foreign investors see as
attractive to them and what they see as the features that make
the country attractive for investment. This is an important and
positive result for Maltese policy-makers.
On the other hand, the stability of the social climate — the
parameter that most respondents deemed to be attractive
— was one of the least important factors they considered in
rating Malta’s FDI investment offer. In the EAS, stability and
transparency of the political, legal and regulatory environment
(46%) and the country’s or region’s domestic market (37%) are
what most investors want.
In their qualitative responses, respondents indicated that
efforts to maintain a fair, firm and friendly regulatory regime
will complement the drive to maintain and improve Malta’s FDI
attractiveness.
FDI parameter importance to company in
investment decision
First choice Total
Corporate taxation
Local labor skills level
Stability and transparency of political, legal and regulatory environment
Labor costs
Potential productivity increase for your company
Telecommunications infrastructure
Transport and logistics infrastructure
Stability of social climate
Domestic or regional market
RD and innovation environment
Flexibility of labor legislation
Level of protection of intellectual property rights
59%
48%
25%
16%
3%
13%
22%
50%
36%
16%
5%
2%
20%
31%
6%
8%
11%
8%
4%
2%
7%
1%
1%
2%

“For a country with a small and open economy it is
important to focus on the areas that will sustain
and boost attractiveness in this evolving global
scenario.”
Remaining attractive in the face of global
competition
Increasing global competition has been a reality for a number
of years now. For a country with a small and open economy it
is important to focus on the areas that will sustain and boost
attractiveness in this evolving global scenario.
In this light, it is pertinent to note that 64% and 52% of
respondents respectively say that the development of education
and skills, and increasing incentives for FDI investors, are seen as
such focus areas. Investing in major infrastructure and supporting
high-tech industries and innovation are also considered highly.
These came jointly third with 49% of respondents including them
on their priority list.
Focus areas to remain globally competitive
Support small and
medium-sized enterprises
47%
Increase incentives for
FDI investors
52%
Facilitate access
to credit
26%
Develop education
and skills
64% 49%
Invest in major
infrastructure and urban
projects
Support high-tech
industries and innovation
49%
Improve the quality of
products and the value-
added of services
39%
Reduce taxation
36%
Note: respondents could choose more than one area, total number of mentions: 431.

“The need for more support to SMEs
was selected by more respondents
in 2014 than in 2015.”
The 2015 survey reveals an increasing need for Malta to improve
the quality of its products and the value-added of its services.
Just under 40% included it in their list of areas that Malta needs
to concentrate on to remain globally competitive. This is a
significant spike from the 27% registered in 2014.
In this context, it is pertinent to note that the need for more
support to SMEs was selected by more respondents in 2014
(54%) than in 2015 (47%).
Develop education and
skills
64% 63%
Increase incentives for
FDI investors
Invest in major infrastructure
and urban projects
Support high-tech industries
and innovation
52% 50% 49% 41% 49% 50%
Support small and medium-
sized enterprises
47% 54%
Improve the quality of
value-added status of
products and services
Reduce taxation Facilitate access to credit
39% 27% 36% 31% 26% 29%
Encourage environmental
policies and attitudes
23% 21%
Reduce labor costs Increase level of protection of
intellectual property rights
Support struggling
industries
16% 20% 10% 9% 9% 5%
Relax competition
rules
2% 6%
2015 % respondents
2014 % respondents
Source: all MAS 2014 and 2015 respondents.
Note: respondents could choose more than one area.
Focus areas to maintain global competitiveness — 2014 and 2015 replies

Legislative framework
Malta’s legislative framework is held in high regard. Seventy-one
percent of respondents believe that this framework encourages
key players to set up shop in Malta. Although this is down by 7%
from 2014, this shift is accounted for primarily by a decrease in
the “don’t know” camp. The number of those who responded “no”
actually decreased marginally.
Policy-makers would do well to analyze the relative increase in
the level of uncertainty and be able to adopt countermeasures.
Overall, the insurance and banking sectors remain the most
upbeat about the legislative framework as a whole.
Most respondents think that both the local and European
legislative frameworks make Malta attractive. However, some
clear sectoral differences are apparent. Whereas 44% of ICT,
telecoms and iGaming respondents believe that it is a result of
the local legislative framework, 60% of insurance and 67% of
banking respondents believe it is a combination of both legislative
frameworks. The positive perception toward the local legislative framework
was also confirmed when most respondents highlighted that it
was “open for business.”
Legislative framework encourages key sectoral
players to set up in Malta
71%
13%
16%
Yes
No
Don’t know
Legislative framework creating a competitive
edge
Both
Local legislative
framework
European legislative
framework
25%
19%
44%
FinanceMalta fully endorses EY Malta’s attractiveness
survey initiative. Over 2015, Malta’s financial centre
further reinforced its position as an established
European platform for international financial services
firms. Within this context, FinanceMalta has continued
to intensify its promotional initiatives to communicate
this industry’s compelling and competitive value
proposition.
Viewpoint Kenneth Farrugia
Chairman, FinanceMalta

Viewpoint
The results of this year’s EY Malta attractiveness survey
make encouraging reading. The outlook is certainly
positive, especially in the insurance, logistics and iGaming
sectors. Malta remains an attractive location for inward
investment and GO is committed to sustain its efforts to
ensure that this remains the case.
The growth sectors in Malta’s economy, including those
just referred to, depend on communications. This includes
the ability to transfer and manage large volumes of data
rapidly and securely. A robust and reliable communications
infrastructure is, in fact, as important a consideration for
businesses as the many other benefits Malta offers. On
this front, GO is the only provider able to offer the range
and quality of services across fixed and mobile telephony,
internet and data management that a modern business
expects.
Malta remains an attractive
location for inward
investment.
Yiannos Michaelidis
CEO, GO plc
GO investing
to future-proof
Malta
GO’s unique position has come about firstly thanks to a
strategic investment program of €100 million that has
delivered an advanced fixed line, mobile and internet
infrastructure. Secondly, GO has invested heavily in its
back-end operations and human resources, becoming
more efficient and customer-focused. Thirdly, through
BMIT, businesses operating in Malta can make use of
international, award winning, secure and scalable cloud-
based data services.
The level of investment is by no means slowing down. A
further €50 million has been committed to bringing
true fiber connections directly to customers’ homes and
offices. GO is also rolling out a nationwide fiber-connected
4G mobile network, further enhancing our seamless,
high-quality and high-speed service. GO is, in fact, future-
proofing Malta’s communications infrastructure until
the time arrives when even personal gigabit internet
connections, driven by the internet of things, become a
reality.
GO’s investments and our ability to offer state of the art
services, including true fiber connections, will continue to
be an important factor in attracting inward investment.

Viewpoint
Some time ago we received confirmation that our capital
plan for fiscal year 2016 amounting to US$1.9m had
been approved in its entirety. Year after year, without fail,
Cardinal Health’s shareholders have invested an average
of US$1m annually in local operations. What triggers this
sustained optimism in the local business scenario?
Many exponents of this subject normally cite various
reasons for Malta’s attractiveness to FDI, the most salient
being macroeconomic factors and social stability, the
telecommunications and transport infrastructure, legal
and tax frameworks and local labor skills. However, there is
also an array of latent factors that attract and retain FDI in
Malta that are often not given their due importance, if not
completely disregarded.
On many occasions, we have been commended by our
corporate colleagues that — when a project is in the
pipeline — our dynamic workforce always adopts a “we
can do it approach.” While other internal and external
competing companies request more resources to
implement a project, our local facility attacks the status
quo and streamlines procedures in order to be able to
embark on projects with minimal additional resources. This
is only made possible by the flexibility of our workforce.
Our deep commitment to a lean approach, coupled with
dynamism and the urge to learn of our local workforce, has
made us more attractive than other foreign competitors.
We have also embraced a total quality management
concept that has made the Malta facility synonymous
with a high-quality manufacturing process and product.
This has given us the competitive edge over companies
operating in much larger countries, such as China.
James Galdes
FCO, Cardinal Health Malta
Nurturing FDI in
Malta
The openness, can-do attitude and rapid adaptability of
the local workforce to different cultures has instilled in our
foreign colleagues the desire to continue doing business
here.
The reduction in government-induced costs such as utility
tariffs and the various capital incentives to industry
administered by the local government and by national
agencies such as Malta Enterprise serve two purposes.
Apart from giving financial assistance to companies, they
also serve to convey a message of renewed commitment
by government to foreign investment in Malta.
It is absolutely imperative that these crucial attributes of
the local business scenario are marketed in the right way,
both to potential and existing foreign investors.
The openness, can-
do attitude and rapid
adaptability of the local
workforce to different
cultures has instilled in our
foreign colleagues the desire
to continue doing business
here.

1 Eurostat 2015.
Focus on human capital
The cost of labor remains an important FDI parameter for Malta,
ranking 4th in the list of parameters that respondent companies
take into account when deciding on an investment location. Fifty-
eight percent of existing investors indicate that Malta is attractive
in this area. However, there seems to be an increase in relative
importance given by existing investors to other parameters
besides costs. Significantly, they now rate the availability of skills
to be more important than the cost of labor. Potentially, this
mirrors Malta’s recent shifting economic and industrial focus.
The long-term indirect impact of FDI on the rest of the economy
is dramatically illustrated by the skill sets it injected in the local
market. Eighty-four percent of respondents say that FDI helped to
either acquire new skills, or to develop existing ones, with only 6%
saying it had not.
Over the years, many FDI companies have been forging closer
ties with educational providers and training institutes to build
human resources pipelines in possession of the right skills.
This has resulted in the introduction of courses aimed at both
present and future requirements. Companies are also investing
in knowledge transfer through experience, training or both. It is
encouraging that 82% of the companies surveyed are willing to
invest in training to develop skills, either by offering internships
and vocational training or financial help and sponsorship.
Despite progress, demand for skilled labor is outstripping supply.
Malta has the second-lowest unemployment in the EU, standing
at 5.4% in June 2015.1
Less than half (47%) of the companies
surveyed report that they are able to find the required specialized
skills locally, down from 57% in 2014.
Moreover, 52% of the companies facing skills shortages say that
their expansion plans are dependent or linked to filling these
gaps.
Asked to cite the educational levels they require, 56% say
university. Significantly, only 19% mention secondary or higher
secondary levels of education.
Companies may increasingly be able to plug these labor shortages
in the short term with workers from other EU countries.
However, in view of high relocation costs and higher churn rates
as employees return to their country of origin, alternative and
more long-term solutions must be found. Frameworks that assist
these companies to hire, train and retain workers are likely to be
welcomed by industry. Many respondents highlight the need for
Malta to increase its branding and marketing efforts to increase
FDI. It is highly likely that such efforts would also assist in drawing
new talent to the island.
It is encouraging to note that 85% of the surveyed companies
are managing to retain their specialized personnel. This is
similar with the 2014 survey results (87%). ICT, iGaming and
telecommunications were the sectors with the lowest skilled
worker retention rates (72%). In comparison, all insurance
respondents indicated being able to retain their specialized
personnel with manufacturing respondents (93%) reporting the
second highest retention levels.
Various respondents placed an emphasis on the need for
experience, especially in the ICT and banking sectors. A number
of companies also claimed to be unable to compete with certain
companies, vis-à-vis wages, especially in the iGaming sector.
Availability of
specialized skills
82%
7%
11%
Willingness to
invest in training
Managing to retain
specialized personnel
85%
15%
47%
53%
University 56%
13%Other
19%Secondary or higher secondary
Vocational, placements or internships 13%
Skills requirements
Note: does not add up to 100% due to rounding.Source: all MAS 2015 respondents.
Yes No Other

“The Maltese legislative framework
is seen to create a strong
competitive advantage in both the
European and global markets.”
A competitive edge in the European and global
markets
It is reassuring to note that the Maltese legislative framework
is seen to create a strong competitive advantage in both the
European and global markets, with this proportion increasing by
a full 8% to 59% in this survey from 2014. However, it must be
noted that the “no” replies also increased by 3% (to 32%).
The survey also sought to gather information on whether Malta’s
efforts to become a regional trading and business hub in the
Mediterranean for both European and non-European shores, is
being affected by geopolitical developments around the whole
region.
The results are mixed. Whereas 28% of respondents believe that
Malta as a regional hub in their sectors is gaining ground, nearly
17% believe that it is losing ground and just under 40% believe
that it is staying the same.
From a sectoral perspective, all banking respondents believe
that Malta’s standing as a regional hub in their sector has gained
(75%) or remained the same (25%). At least one fifth each of
the insurance and other financial services believe that Malta has
lost ground on this front. Half of manufacturing and 61% of ICT,
telecoms and iGaming respondents believe that the situation has
remained unchanged.
Once again, strong sectoral differences feature prominently.
Ninety percent of iGaming respondents believe that Malta’s
legislative framework does so. However, this figure declines
to 43% of manufacturing respondents, with 50% of investors
from this sector outlining that it does not create any sort of
competitive advantage. An analysis of responses by size of
company and by number of employees reveals a general trend:
the smaller the company, the higher the percentage believing
that the Maltese legislative framework offers them a European
and global competitive advantage. Hence, whereas up to 81%
of companies employing less than 10 believe so, this figure
plummets down to 43% for companies employing more than one
hundred. Indirectly, this might be a result of smaller companies’
increased reliance on the local legislative framework (support
frameworks) when compared with their larger counterparts,
which can rely on other sources of support and assistance or
technical expertise (including internal ones). The latter might
also take such a legislative framework for granted compared with
the smaller companies that will need these to look at expanding
their markets abroad.
+ 8 points
59% + 3 points
32%
Malta’s legislative framework offers
an international competitive advantage
Yes
No
affected by developments
Losing17%
Staying the same
39% Gaining28%

“Central government and
regulatory authorities are
widely perceived to be
open for business.”
This year’s focus: Malta open for business
Investors often seek out investment destinations that adopt an
“open for business” approach. Respondents were asked to rate
the openness to business of a number of entities — different
levels of government, regulatory authorities, the civil service, the
general public and the courts.
Most investors think that the national government (65%) and
the regulatory authorities (61%) are open for business. Besides
giving a strong global competitive advantage, the country’s
legislative framework is also considered to be open for business
by the majority of respondents (53%). On the other hand,
investors sent a clear message that the civil service and the law
courts need to adopt a more business-friendly approach, with
under 15% considering them to be open for business. These
ratings require follow up actions by policy makers.
Entities' openness for business
OpenVery open
Courts
11%
Legislative
framework
4%
49%
Regulatory
authorities
11%
50%
Central
government
15%
50%
General
public
2%
40%
Local
authorities
2%
25%
Civil
service
13%

Viewpoint
Few people beyond Malta’s shore realize that it has one
of the busiest ports in the Mediterranean. With expansion
plans in the pipeline, it could be the third-biggest port.
More importantly, Malta is only six miles offshore from
the world’s busiest trade routes, connecting China and the
Middle East to Europe and North Africa through the Suez
Canal. Clearly, this fortunate geographical fate has fueled
the country’s economy for centuries.
The same fate is key to our own strategy in Malta. It is
important for us to continue to understand how best to
leverage it, how we can strengthen, build and sponsor
warehousing and distribution from Malta and how we
connect the port more closely with the airport to drive
more trade traffic. In this sense, EY’s excellent Malta
attractiveness survey is one of our main benchmarks for
helping us to reach these targets.
Our €75 million Malta Trade for Growth Fund plays an
important part in realizing this strategy by connecting
customers with international opportunities, to assist the
local economy to flourish.
Just as connectivity is an important aspect of trade and
logistics, so is having a bank that connects customers to
important market nodes around the world. HSBC is in a
unique position to do so, to provide local insight through
people on the ground, and offer the financial support for
businesses to expand globally.
Furthermore, we have unveiled business tools such as the
‘Why Malta?’ film in five international languages as well as a
comprehensive Doing Business in Malta guide.
Michel Cordina
Head of Commercial Banking, HSBC Malta
Malta’s development as
a center of excellence
in trade and logistics:
the next step
As the first Logistics Managers and Practitioners Forum in
June 2015 helped us realize, there are great opportunities
for Malta to become a regional hub for transport and
logistics. The key is to upgrade human resources and
training, along with other elements such as investment
in equipment and technology and adherence to high
standards.
Looking at the latest HSBC Global Research forecast, world
merchandise trade should increase by circa 8% a year from
2017.
It is in Malta’s interest to be ready for this sea of
opportunities and if the prevailing sense of optimism
among businesses is anything to go by, they are likely to
bring a new wave of trade and logistics opportunities for
Malta.
The key is to upgrade human
resources and training, along
with other elements such as
investment in equipment and
technology and adherence to
high standards.

Reforms needed for Malta to
become an innovation leader in
different sectors
Looking forward, a reduction in
bureaucracy (18% of total mentions,
67% of all respondents), improvement in
education and training in new technologies
(13% of total mentions, 49% of all
respondents) and the development of a
culture of innovation and creativity (13%
of total mentions, 47% of all respondents)
are the reforms respondents believe Malta
should implement to make it a market
leader in innovation in their respective
sector. These are practically the same
figures as those of 2014.
Reforms needed to become sectoral innovation leaders
Note: respondents were provided a list of reforms to choose from.
Reducebureaucracy 67%
Improve education and training in new technologies 49%
Develop a culture of innovation and creativity 47%
Increase tax incentives for innovative companies 45%
Reduce taxes 28%
Develop venture capital and other ﬁnancial tools 22%
Develop joint research programs at European level 21%
Support micro, small and medium enterprises 20%
Develop entrepreneurship 17%
Focus investment on sector-based hub and cluster concepts 15%
Reform labor laws 15%
Develop incubator and accelerator programs 14%

Future
In it for the
long run
p.48 Future expansion plans
p.49 Key sectors to drive Malta’s
growth — iGaming leads the
way
p.50 The next generation in
gaming regulation
47

Future expansion plans
2009 20112010 2012 2013 2014 2015
Yes Can’t say
No
72%
67%
69%
54% 53%
56% 55%
17%
14%
16%
28% 32%
26% 24%
11% 9%
15%
16% 15%
18% 22%
Expansion plans in Malta over the next year
55%Yes
22%
Can’t say
24%
No
Expansion
plans in Malta
In it for the long run
Clearly, by retaining and, more so, by expanding its presence
in a country, a firm is expressing a vote of confidence and an
increased commitment to it.
The number of companies indicating some form of plans to
expand operations in Malta remains stable in this year’s survey
(55%).
Analyzing the data by company size, it transpires that the
proportion of the smallest companies (less than 10 employees)
having some expansion plans stands at 61%. This figure amounts
to 50% for companies employing 50 and more.
Moreover, companies with smaller operations in Malta tend
to prefer back-office expansion (39%) compared with those
employing over 50 persons (25%).
Presence in Malta in 10 years’ time
One of the most positive indicators of the 2015 survey is the
increase in the number of firms predicting to still be present in
Malta in 10 year’s time. This figure has increased from 59% in
2014 to 71% in 2015.
71%
to be present in
Malta
201559%
2014
The number of companies that intend to be present in
Malta in 10 years’ time has risen by 12% from 2014 to 71%.
Future In it for the long run

“iGaming, fund administration and asset
management are considered to be the key sectors
to drive Malta’s growth in the next five years.”
Key sectors to drive Malta’s growth — iGaming
leads the way
iGaming (60% of respondents), fund administration (43%) and
asset management (41%) are considered to be the key sectors
to drive Malta’s growth in the next five years. These figures show
little change over 2014.
There was a slight increase in those selecting the iGaming sector
compared with 2014, a decline in those including digital media
and games in their list, with a counterpart increase in responses
for the construction industry.
A significant increase was also registered in the logistics sector
(from 10% to 16%). Potentially, this could be a reflection of
public policy, which has indirectly contributed to the promotion of
these two sectors.
When asked which business functions will draw the most
investment in the next five years, back-office operations (63%)
and headquarters (40%) remain the most cited functions.
Logistics centers are the business functions that have seen the
largest increase over the previous year, with 30% (up 12%) now
including it in their list of areas.
Key sectors driving Malta’s growth into the future
Note: respondents could choose more than 1 sector. Total number of mentions 563.
Asset
management
41%
ICT and
telecoms
31%
iGaming
60%
Fund
administration
43%
Other financial
services
32%
Pensions
28%
Real estate,
infrastructure
and construction
27%
Banking
30%
Maritime
29%
Trust
administration
27%
Aviation
25%
Insurance
24%
High technology
manufacturing
27%
Digital media
and games
27%
Pharmaceuticals
25%
Business functions drawing
most investment in next five years
63%Back office
40%Headquarters
33%
Research and
development
30%Logistics center
19%
Sales and
marketing office
9%Manufacturing
7%Other

Viewpoint
The global gaming sector, and the remote gaming sector in
particular, is as dynamic as they come. Product innovation,
cost-effectiveness and market access are the names of the
game, as it were.
Gaming is highly regulated in most jurisdictions. Specific
regulation of remote gaming is evolving over time and
Malta has been at the forefront of its development with
the promulgation of the Remote Gaming Regulations in
2004. Malta is often grouped with the so-called “offshore
jurisdictions” owing to the isolated, limited domestic
market features that are more cost-effective homes to
gaming operators faced with increased regulatory burdens.
These burdens result from the state-by-state, silo approach
to regulation which, if they continue to go forth unchecked,
threaten the sustainability of regulated markets.
Malta’s primary jurisdiction status in the global gaming
landscape is rooted in many key features which, taken
together, make it a gaming operator’s natural home.
Offshoring is not one of these features. Rather, it was,
and remains, the jurisdiction of choice in Europe to shore
up the otherwise unregulated gaming offers. It is the
jurisdiction of primary establishment for many first-tier
operators holding licenses from Malta and a multitude of
other jurisdictions. The remote gaming industry today,
more than ever, understands that it needs to be ashore of
a well-regulated jurisdiction to mitigate its inherent and
adjacent risks and flourish commercially without incurring
avoidable regulatory and other costs, hence releasing
valuable energy and impetus for innovation.
Malta’s attractiveness and enviable competitive position in
the evolving gaming world are attributed to many factors
that make its full spectrum ecosystem of support services
and infrastructure unique.
Joseph Cuschieri
Executive Chairman, Malta Gaming Authority
The next
generation in
gaming regulation
Furthermore, its regulatory structure is moving to
its next generation — a regulatory framework that is
conceptually designed to harbor an industry that is keen
to grow within logical, well-thought-out, evidence and
risk-based parameters. This is not to say that risks have
remained static over the years. Indeed, as technology
and markets converge, exposure to certain risks shifts
and even becomes more complex. Gaming regulation
needs to be technology and game neutral, but not
risk neutral. While the objectives of regulation remain
the same, that is to protect consumers and guarantee
integrity, their attainment, and therefore the success
of regulation, cannot be measured by the degree of
compliance of the operator base but by the performance
of the measures employed. Regulatory and monitoring
tools must be sharpened, modified, even totally replaced
to ensure timely effectiveness in the business model and
jurisdictional context in which they are applied.
The allegations made by the Italian authorities, that led to
the arrest in Malta of six persons involved in three gaming
companies in July of this year, strengthened our conviction
that regulatory mechanisms and tools have a very short
shelf life. Compliance is simply not sufficient. Measures
and evidence of effectiveness are as important.
The next generation of gaming regulation Malta is giving
life to will be taking these factors, and many others, into
account. The proposal for the new Gaming Act expected
to be launched by the end of November is a widely scoped
framework that will empower the responsible minister and
the authority to implement tailored measures under one
consolidated regime.
My vision and the brief I have given is a clear one: future-
proofing our laws and opening up to innovation with smart
and technology neutral regulation.

Areasofaction p.54 Staying in the race and
winning
p.55 Focusing on learning
p.56 Manufacturing is not dead
p.57 Exploiting our geographic
location
p.58 Defying geography digitally
p.59 Plugging the infrastructure
gap — physically and
digitally
p.60 Open for business — really
Maintaining
attractiveness
53

Staying in the race and winning
Competition to attract FDI is fierce, as countries around the globe try to outdo each other with new and innovative measures
to attract more. At a deeper level, profound economic changes highlight the need for renewed positioning strategies.
Consequently, Malta needs to continue to hone its strategy to target sectors with high future potential, clearly differentiating
itself as a front-running FDI destination with a clear roadmap rather than a scattergun approach. This approach has already
delivered the goods. Today, Malta’s iGaming, asset management and insurance sector offers are recognized as leaders in
the international market. Malta can replicate these results in new sectors, thereby attracting a major brand or company to
anchor and drive the sector forward.
Government
EY’s Location Advisory Teams provide assistance to
governments across the world to develop new market
sectors. Our assistance includes cutting-edge analysis of
the locations market, competitive benchmarking, scenario
development, identification of target sectors and assistance
with strategy development and implementation. Our Policy
professionals provide independent and deep insights into the
consequences of regulatory and funding initiatives. We also
act as investment delivery partners, assisting government to
bring in new investors by opening up new markets through
our unparalleled global reach. Our attractiveness surveys
are widely viewed as a benchmark source of information and
analysis on FDI.
Private sector
Our multidisciplinary teams help companies cover every
angle of setting up in Malta. We have an unparalleled track
record in strategic planning and financial modeling for
complex investments. EY Malta’s professionals are also
plugged into a vast international network of relationships
with government bodies, local suppliers and service
providers.
HowEYcanhelp
1
Areas of action Maintaining attractiveness

Focusing on learning
The increasingly sophisticated requirements of existing and potential investors inevitably call for an evermore specialized
workforce. As this study shows, sectors projecting future growth can reach their destination only if pools of skills are
available to take them there. How can Malta do this? Firstly, the country needs to continue to invest and support educational
and training programs to satisfy current and future market demands. In doing so, it should encourage closer cooperation
between educational providers and industry to ensure that the right skill sets are nurtured as well as to promote internships
and apprenticeships. With many companies’ expansion plans linked to the current availability of specialized labor and
unemployment at record lows, Malta should also focus on facilitating the inflow of international talent from the EU and other
countries. In doing so, local workers will benefit from knowledge transfer, creating a ripple effect across the economy.
Government
EY’s professionals can provide deep market studies to outline
current and future skill needs. We also assist governments
in designing effective cofinancing frameworks for companies
to invest in skills training. Our Policy professionals
support schemes to increase female and aging workforce
participation. We can provide support in attracting new
private educational providers to the country utilizing our
strong global networks.
Private sector
Our Advisory professionals support companies to identify
the right incentive frameworks to support their training
needs. They have extensive experience on a range of local
and European cofinancing programs and can support
the process life cycle from preparation, submission and
management of appropriate schemes.
HowEYcanhelp
2

Manufacturing is not dead
Manufacturing has been the backbone of Malta’s economy for decades, gradually evolving from low to higher value-added
industries. Recent developments suggest a global trend toward reshoring into Europe, driven by concerns around IP
protection due to weak regulation and enforcement, rising labor and shipping costs, risk of supply chain disruption due to
geopolitical tensions, speed of delivery and ease of doing business.
This new trend provides Malta with a golden opportunity to improve the sector’s attractiveness from an FDI perspective.
Manufacturing brings high-skill, high-quality jobs. It creates novel opportunities in supply chains, drives innovation and
creates positive cluster effects, particularly around research and development and the skills base.
In order for this opportunity to be taken, government must put in place the proper framework for the advantages of moving
production to Malta to be realized. Some specific measures include the widening of RD and IP incentives, support for
apprenticeships, access to finance schemes and incentives to support capital expenditure. It is also imperative to keep
constantly in touch with existing and prospective investors and develop niche services to meet investors’ needs as these
evolve.
Government
EY’s highly experienced Tax Policy experts can help
government to navigate through the complexities of
investment incentives and implement policy initiatives. Our
Attractiveness Team does market studies and benchmarking
analyses of the potential attractiveness of proposed
incentives. Our Business Modeling and Economic Advisory
Teams provide decision-making support through the
development of models that generate dynamic projections of
the impact of proposed incentives.
Private sector
EY’s Business Modeling Teams use macroeconomic
techniques to identify where the lucrative reshoring
opportunities exist. Our Strategy Team advises on the costs
and benefits of each of these using their deep industry
knowledge, functional expertise and financial modeling
ability. Our Incentive Advisory Team assists companies to
review and tap all forms of aid and incentive schemes. In
turn, the attractiveness team supports the whole relocation
process, including licensing and setup. We also provide
International Tax Advisory services to determine how a
reshoring decision might affect business today and how
regulatory change might do so tomorrow.
HowEYcanhelp
3

Exploiting our geographic location
For centuries, Malta’s strategic location in the center of the Mediterranean has driven various sectors of the economy. Today,
as an independent state and an EU member, more foresight, planning and investment are required to take full advantage of
existing and future opportunities.
Embarking on an upgrade of the key logistics infrastructure, as well as the development of new transportation corridors, can
act as the major catalysts to shift up economic activity to a new gear. This investment must be coupled with business-friendly
measures such as cargo preclearance and flexible bonded warehouse regulations to reduce transit times. Doing so would
enhance the country’s position as an ideal trading and distribution hub for Asian companies looking to service the EuroMed
region — an opportunity that remains largely untapped.
Malta also offers an oasis of stability in a region plagued with geopolitical troubles. The country should continue to enact
innovative legislation that addresses the practical needs and objectives of businesses and workforces in these geopolitical
hotspots, offering a safe haven for headquarters, expensive capital equipment and promising start-ups.
Government
EY’s Lead Advisory Teams can expertly drive economic
feasibility assessments for logistics infrastructure, including
delivery model analysis, CBA and private-public comparator
models. Such analyses give policy-makers a clear picture
of the net economic benefits of proposed projects. EY
also offers a range of services that help bring external
stakeholders on board, from assistance to develop strategic
business cases to capital project management to ensure
accountability and transparency among investors and
citizens. Our Location Advisory and Policy Teams can also
assist with the formulation of innovative policy measures.
Private sector
EY’s Tax professionals can assist in managing compliance
and risks associated with the import and export of goods
and respective excise and duty costs, drive improvements
to supply chain cash flow, increase the velocity of goods
moving through the supply chain and minimize international
tax exposure. Our Human Capital Teams provides solutions
across the global mobility spectrum, to help clients
understand how best to manage and utilize international
assignees. We focus on the delivery of tangible solutions that
best fit our clients’ strategic needs, optimize cost efficiencies
and minimize the risks associated with international
assignees.
HowEYcanhelp
4

Defying geography digitally
Malta’s attractiveness is undoubtedly hampered by the size of its local market and its natural isolation as an island state.
The borderless world of the digital economy presents investors with boundless opportunities to tap into and counteract these
geographic realities. In today’s world, companies across the globe can be serviced remotely by organizations and digital
nomads based in other locations. And Malta could provide the perfect base. Malta offers a beautiful Mediterranean location
and excellent climate, a rich cultural history dating back thousands of years, a low cost base, a skilled English-speaking
workforce and an efficient technology infrastructure.
As digital technologies transform Europe’s economy and society, demand for talent will increase further. Malta needs to strive
hard to create a burgeoning digital cluster that attracts talent from all over the world. The country needs to be attractive to
start-ups and companies of the future through frameworks that support innovation and investment. It also needs to work
hard to promote the “product” it offers in all corners across the globe through effective marketing strategies. Continued
investment in e-government services, improving education and training in new technologies and increasing access to finance
are central to achieving this aim.
Government
EY is a leading consultancy for digital government. From
creating public digital strategy to implementation, we put
our rich expertise at the disposal of strategy development,
target group identification and expectation gathering,
blueprint creation, process re-engineering, information
technology development and audit and implementation.
Our Digital Teams can provide government with social media
listening services, delivering critical insights that can be
acted upon to make Malta more attractive for FDI. EY also
provides support in developing attractive entrepreneurial
ecosystems to help drive investment.
Private sector
EY is the market leader in advising high-growth
companies. Our teams provide a broad range of services
to entrepreneurs including feasibility studies and market
research; product development costing; business plan
support; valuation and business modeling; tax, legal and
ownership structuring; assistance with capital raising,
mergers and acquisitions and much more. We’ve also
developed the EY 7 Drivers of Growth to help companies
align their capabilities with their growth strategy to
accelerate it. Finally, EY’s Entrepreneur of the Year awards
help uncover exceptional new entrepreneurs.
HowEYcanhelp
5

Plugging the infrastructure gap — physically and digitally
Malta’s aging infrastructure across a number of sectors is viewed by some investors as a potential deterrent for FDI.
Infrastructure for roads, urban transport, education, waste management and renewables requires potentially significant
capital investment, partly as a result of an existing backlog in their development and maintenance. Boosting networks and
internet architectures in emerging areas such as machine-to-machine communication (M2M) and the Internet of Things
(IoT) will also require sustained investment in digital infrastructure. The extent of the investment needed to upgrade and
renew Malta’s infrastructure — together with its use and operations — could stimulate the drive of significant amounts of
foreign investment to the island. Combining private and public sector resources into infrastructure projects can also help
leverage efficient resource use to enable project execution and delivery. Whether this takes the form of a management
contract, public-private partnership (PPP), or a concession will depend on what is appropriate in the context of a project.
However, the central element is that both the private and public sectors can come together and work effectively, as
experience across the globe shows.
Government
EY is regularly named financial advisor of the year by the
world’s top think tanks, and places first among international
financial advisors by number of completed projects. EY’s
Infrastructure Advisory professionals have a strong track
record in providing advice across the infrastructure life
cycle. This includes option appraisals, risk identification and
management, development of financial models, funding
options, and assistance in presenting projects to the market.
Our global team works together to offer skills, knowledge
and access to networks and we bring the required drive,
focus, commitment and innovation to help bring about
sustainable change.
Private sector
We provide support from the earliest stages of analysis
and project evaluation, through to procurement, financial
close, construction and operations. We assist clients
in devising and comparing financial plans and delivery
approaches for projects involving public or private financing,
project revenues and grants, as well as support plan
implementation. Our Infrastructure Advisory professionals
also provide structuring assistance for transactions, advising
on the appropriate form and balance of debt and equity. Our
professionals also assist in clients’ efforts to raise debt and
equity directly from providers.
HowEYcanhelp
6

Open for business — really
It is clear that policy-makers need to work hard to remove obstacles to business efficiency. Measures and reforms to
facilitate business, enhance labor market flexibility, cut red tape in state entities, simplify regulations and speed up judicial
proceedings are needed to improve Malta’s attractiveness for FDI further and to make it a leader in various sectors. Although
these measures have been high on the agenda of successive governments, and Malta has worked hard to drive e-government
services, debilitating bottlenecks still exist in a number of key national processes.
A successful way forward requires careful planning to ensure that goals are realistic, achievable and measurable. However,
planning alone is not sufficient. Effective stakeholder buy-in is required. Doing so requires effective change management to
move stakeholders up the commitment curve, committing them to the success of the program to alter their behavior and
embrace new ways of working. Open communication plays a vital role in this respect.
Government
EY is helping governments across the world to deliver
effective and efficient services, which better serve the
public and industry by cutting red tape. Our teams have
extensive project and change management expertise and
use proven methodologies. We provide tailored solutions,
practical insights and industry experience to help our clients
achieve improvements in service delivery and operational
performance that drive results. Our teams help build
accountability and transparency into the process through
the design of effective metrics to measure results. We also
develop and implement stringent risk-management protocols
to protect information-technology infrastructure from a
range of threats.
Private sector
EY’s Advisory services help execute enterprise-wide
performance transformation initiatives. From supply
chain and operational efficiency improvements,
customer acquisition and retention strategies to finance
transformation strategies, we help turn strategy into
reality. EY also provides a robust set of services to make
your business strategy work in the digital world. Our teams
leverage deep industry experience of innovation, analytics,
risk and cybersecurity, customer experience, strategy,
operations, technology, finance and tax, to drive digital
transformation.
HowEYcanhelp
7

Methodology
A total of over 100 decision-makers from existing
FDI investors in Malta answered the dedicated
e-questionnaire up to the end of July 2015. The
respondents sector and sizes both globally and locally
vary.
The spread of respondents is very similar to the
2014 and 2013 cohort, and this further facilitates
comparison of this year’s results with those of previous
years wherever the same questions were asked.
Surveyed companies by turnover
Less than €1 million22%
Between
€1 and €2 million
18%
23% Between
17% Between
22% More than €35 million
Full-time employees: global
More than 100
Between 50 and 100
Between 10 and 50
Less than 10
58%
9%
20%
14%
Percentage of revenue exported
53%
12%
6%
4%
5%
21%
0%1%-10%11%-25%
26%-50%51%-75%76%-100%
Full-time employees: Malta
More than 100
Between 50 and 100
Between 10 and 50
Less than 10
27%
12%
30%
30%

EYinMaltaAbout EY
EY is a global leader in assurance, tax, transaction and
advisory services. The insights and quality services we
deliver help build trust and confidence in the capital
markets and in economies the world over. We develop
outstanding leaders who team to deliver on our
promises to all of our stakeholders. In so doing, we play
a critical role in building a better working world for our
people, for our clients and for our communities.
EY in Malta
EY Malta forms part of the EMEIA Area, combining 98
country practices into a single operating unit, which
now embraces over 80,000 people and over 4,000
partners, working across 12 regions. This structure
enables us to move quickly and bring together the best
teams to serve our clients wherever they are.
EY has been operating in Malta since the late 1990s.
The firm has been growing rapidly and now employs
over 200 people locally. We provide assistance to a wide
range of clients that range from private individuals and
entrepreneurial businesses to major public companies
and large multinationals. We help them to anticipate,
define and deal with issues that are critical to their
success.
Effectively, EY Malta has four services lines —
Assurance, Tax, Transaction Advisory Services and
Advisory, comprising 19 business units, each with
their own head who supports the local partners. These
business units encompass:
Assurance
• Asset Management
• Banking
• Industrial and Commercial
• Insurance
Tax
• International Tax Services
• Accounting, Compliance and Reporting
• Business Tax Compliance
Transaction Advisory Services
• Mergers and Acquisitions
• Project Finance and Infrastructure
• Transaction Support Services
• Valuation, Business Modeling and Economic Advisory
Advisory
• Asset Management Advisory
• Banking Advisory
• EU Advisory
• Financial Crime Advisory
• Insurance Advisory
• Internal Audit
• IT Risk and Assurance
• Risk Advisory
We work closely with our clients in a collaborative style,
gaining a clear understanding of your organization and
striving to identify issues before they become problems.
And with our global focus on 14 global industry sectors,
backed up by leading practices, our clients benefit from
a market-leading response to their specific needs.

64
EY European attractiveness survey: comeback time
There is a breath of spring in this year’s European attractiveness survey. After much
anticipation, investors seem convinced that Europe has at last broken free from
recession and is finding a path to sustainable growth. Though accelerating recovery
and cheap shale gas triggered a re-rating of the US, Western Europe convinced even
more investors that it is now the place to be. And 59% of them believe that Europe’s
attractiveness will improve still further during the next five years. To make the best out
of Europe’s comeback, both in terms of economic growth and as a leading destination for
FDI, and sustain these trends in the upcoming years, policy-makers should continue to
remove obstacles to business efficiency.
Publications
UK attractiveness survey 2015: another great year — but time to
reflect on how the UK can stay ahead of the pack
The UK put in another strong performance in FDI in 2014. The UK economy continues
to grow, strengthen and evolve. The survey’s results signal rising global confidence
both in the long-term outlook for the UK, and in the country’s positive environment for
businesses, innovators and entrepreneurs. EY’s research into the perceptions of the
UK among overseas investors produces some equally encouraging results. Companies
surveyed ranked the UK fourth in the world and number one in Europe as the most
attractive destination for FDI projects over the coming three years.
EY Eurozone Forecast
The EY Eurozone Forecast is a quarterly overview of developments across the Eurozone
and the 18 individual Member States. The forecast uses the European Central Bank
(ECB) model and governmental statistics to offer insight into the issues that affect
the region’s governments and businesses. The forecast tracks developments across the
Eurozone in order to help high-level executives make informed business decisions. A
quarterly report on each of the 18 countries in focus is also prepared, which includes a
report on Malta.
EY Eurozone Forecast: outlook for financial services
The EY Eurozone: outlook for financial services uses this macroeconomic overview
to provide a comprehensive forecast for the regions, banks, asset managers and
insurers. Both forecasts are produced in cooperation with Oxford Economics, a leading
independent forecasting and research institute.
The forecasts track developments across the Eurozone in order to help high-level
executives make informed business decisions.
64

Malta Overview 2015 Gaming
Malta is recognized as a global player in the remote gaming industry. The inception of this industry took
place in 2004 when Malta launched its own remote gaming regulations. Since then, large international
companies have established themselves in Malta with the result that 10 years later, the gaming industry
makes a significant contribution to Malta’s GDP.
Malta’s regulatory framework is globally recognized as being one of the most efficient, fair and transparent
with a high level of protection of minors and vulnerable persons, anti-money laundering and game integrity
when compared with other regulatory frameworks within and outside the EU. Malta enjoyed the first mover
advantage as a result of its remote gaming regulations and today, Malta has some significant strength to
offer the industry.
Netherlands attractiveness survey 2015: from confidence to investment
The confidence foreign investors have in the Netherlands is in line with their confidence in Europe.
International firms have had a lot of confidence in the Dutch business climate for years, but it has never
been as high as this year. For instance, 32% of the senior executives interviewed plan to expand or make new
investments in the Netherlands in 2015. Eighty-five percent also expect that the Dutch business climate
will (greatly) improve in the next three years, while 73% are confident that the Netherlands will maintain
its attractive fiscal climate, which includes the participation exemption, ruling practice as well as the large
number of tax treaties.
BaroMed 2015: the next opportunity
EY’s BaroMed attractiveness survey assesses how the Mediterranean region is perceived and identifies
future challenges raised by the community of foreign investors. The survey aims to address the growing
needs, questions and concerns of clients about an area covering countries around the Mediterranean and in
the Gulf region while they expand their manufacturing and services operations.
EY’s attractiveness survey Africa 2015: making choices
In the past year, Africa has experienced stronger headwinds than in recent times. Economic expansion
this year is likely to be at its slowest in five years, dragged down by the impact of lower oil prices on the
Nigerian and Angolan economies, as well as South Africa’s sluggish growth. The survey reveals that investor
sentiment has softened somewhat, and that FDI projects are down for a second consecutive year.
Yet economic growth across the continent remains resilient. Despite the headwinds, growth in sub-Saharan
Africa (SSA) will beat the emerging markets average, and be outstripped only by developing Asia. Ethiopia,
Kenya, Tanzania, Mozambique, Zambia and Cote d’Ivoire are among 22 economies in SSA that are expected
to grow by more than 5% this year.
65
EY’s attractiveness survey Malta 2015 Malta: open for business

About EY
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust and
confidence in the capital markets and in economies the world over. We
develop outstanding leaders who team to deliver on our promises to all
of our stakeholders. In so doing, we play a critical role in building a better
working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of
the member firms of Ernst Young Global Limited, each of which is a
separate legal entity. Ernst Young Global Limited, a UK company limited
by guarantee, does not provide services to clients. For more information
about our organization, please visit ey.com.
© 2015 EYGM Limited.
All Rights Reserved.
EYG no. AU3439
ED None
This material has been prepared for general informational purposes only and is not intended to
be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for
specific advice.
The views of third parties set out in this publication are not necessarily the views of the global EY
organization or its member firms. Moreover, they should be seen in the context of the time they
were made.
ey.com
EY | Assurance | Tax | Transactions | Advisory
Contacts
Simon L Barberi
Senior Manager, EU Advisory
Tel: +356 2134 2134
simon.barberi@mt.ey.com

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