The way forward

The way forward for our ECONOMY

By any measure, Malta is a remarkable success story. Since 1964 our GDP has grown by a hundred times, reflecting the emphasis that policymakers have always given to economic progress and the establishment of businessfriendly legislation. Successive administrations have strived to attract investors to our islands and create the conditions for new economic niches. As a result, Malta is one of the most diversified and open economies in the world.

Having an attractive tax system played a significant role in attracting foreign direct investment and helped the development of our locally-owned industries. The taxation profession and the advice it has dutifully provided to Government have been key to our progress. Corporate taxation is one of Government’s main revenue sources, amounting to one euro in every six euro of tax revenue collected.

Legal, accounting and management consultancy services generated nearly €690 million in value added last year, double the amount in 2012. This sector generates 12,000 very well-paying jobs, providing employment to a lot of our graduates.

Some think that our success story is down to us having an attractive tax system. As Minister for the Economy, I can attest that tax would not be a sufficient motive for a company to set up shop in Malta. Investors with real presence require much more than a good tax system. They need things like an excellent infrastructure, good access to their markets, a well-trained and productive labour force, and a good business climate.

In coming years, the challenge that we face as a prosperous economy is not as some fear whether we will have to change our tax framework. I believe that with the aid of the excellent tax profession we have in this country, we will be more than able to accommodate any changes arising from our international obligations.

Our challenge will be how to ensure that our success does not make us less competitive. This goes beyond whether our wages converge and start to exceed the EU average. Again, I believe that we should not see this as a risk, but as one of our aims. We joined the EU to become the best in Europe and not to remain a low-cost economy.

To make our next move up the global value chain we have to improve our factors of production so that they become more productive. Our education system needs to make a great leap forward and create the entrepreneurs of our tomorrow. We have to build a better infrastructure that supports the economic sectors of the future. Our way of doing business needs to modernise and facilitate the transformation of our economy.

My priority is to ensure that our country makes large strides forward in the ease of doing business. We cannot rest on our laurels and have to remain nimble, continuing to keep our legislation the best in town. We have to continue to diversify, while still supporting existing industries. The moment we stop moving forwards we will start sliding backwards.