Investment Factors
Government Attitude Towards Foreign Direct Investment
Over the last years, Malta has been successful in sustaining steady inflows of FDI across a number of sectors. FDI flows in Malta amounted to €792.1m during 2010. Providing access to the EU single market, the island’s proximity to, and cultural links with, North African and Middle Eastern countries serve to attract companies looking to use Malta as a ‘stepping stone’ for trading, distribution and marketing for international operations in Southern Europe and North Africa. With its strong incentives intended to encourage and assist foreign investors, Malta has attracted a number of international businesses to its shores. Companies such as the Swedish industrial group Trelleborg and German company Playmobil have been amongst the most successful manufacturing operations in Malta, not to mention several pharmaceutical manufacturers. Malta adopts the Bolar provisions in its patent legislation setting out the circumstances when third parties may experiment and examine pharmaceutical drugs while these are still protected by patent. Over the past 20 years Malta’s economy has been increasingly more focussed on professional services, and industries such as financial services and the repair and maintenance of commercial aircraft have been successfully established.
With an average trade-to-GDP ratio of 82%, trade is of vital importance to the economy, and the country’s exposure to international trade is one of the highest worldwide. Malta’s main trade partner is the EU, however, trade with Asia, mainly China and Singapore, Russia and the USA is increasing. This is in line with the country’s recent push to target new markets. Malta’s leaders are constantly working on developing new ties with foreign governments in order to facilitate worldwide market access for all industries. The country’s strong network of almost 60 tax treaties helps to ensure that this goal will be achieved and makes the island particularly attractive as a business hub.
Economic Trends
The island’s small, open economy has proven to be remarkably resilient in the face of the global economic downturn. Malta was one of the last countries to enter the recession and also one of the first to return to growth. In 2011, Malta’s economy remained healthy, and the country registered annual real GDP growth of 2.1%. The unemployment rate stood at 6.6% in December 2011, the fifth lowest within the EU, while the deficit is estimated to have narrowed to 3% of GDP. According to Eurostat figures, Malta also registered the largest decrease in government debt to GDP ratio during the third quarter of 2011, down to 70.3% of GDP.
Continued growth appears assured, although the risk of spillovers from the euro area crisis cannot be totally excluded. Malta’s government is confident that it will navigate successfully through the challenging environment, having already mapped out the path for the future well-being of the country. The government’s strategy, titled Vision2015+, identifies a number of core areas such as financial services, ICT, manufacturing, health and education in which Malta wants to become a centre of excellence in the Mediterranean.
Investment Incentives
Malta Enterprise is enabled by the Malta Enterprise Act (ME Act) to support the development of enterprise in Malta. Malta Enterprise has developed a new set of incentives for the promotion and expansion of industry and the development of innovative enterprises. Malta Enterprise provides incentives for foreign direct investors and local enterprises demonstrating commitment towards growth and increase in value added and employment. Enterprises engaged in manufacturing, ICT development activities, Call Centers, Healthcare, Pharmaceuticals, Biotechnology, among others, may benefit from these incentives.
Enterprise Support
MicroInvest – Supports for micro enterprises and the self-employed to innovate, expand, and/or develop their operations.
Business Advisory Services
Malta Enterprise provides business advisory services in the below areas:
Business Development Scheme – This scheme is intended to facilitate high-value adding projects that are likely to offer a significant contribution to the regional development of Malta through substantial job creation. The scheme may support various activities such as supporting the initial development phase of enterprises establishing an operational base in Malta.
Create – This incentive aims to support creative businesses whose economic performance is directly linked to the creative talent of those involved in the business. Further support is provided to help the development of creative communities in artistic zones thus sustaining the development of said zones and interdisciplinary creative cluster developments.
ERDF International Competitiveness Grant Scheme – Support to facilitate the development of new markets or assist in the introducing of new services or products in established markets.
Network Support Grant Scheme – Collaborating in a network will enable a enterprises to build synergies and attract business deals which would otherwise be difficult to conclude as individual enterprises.
Quality+ – Quality+ encourages Small and Medium-Sized Enterprises (SMEs) to continuously improve the quality of their products, services and processes through the:
Trade Promotion – Participation at International trade fairs, and trade missions are a unique and rewarding experience. Participation will undoubtedly allow enterprises to reap a number of benefits since they will be able to experience the market on a first hand basis, discover new insights, and establish potential business partners.
This incentive will support:
Hospitality
Energy Efficiency Measures for the Hospitality Sector – The promotion of environmental sustainability and pro-environmental business models has become a priority in today’s ‘green’ conscious society. Thus investments in energy saving solutions and renewable energy sources are no longer a commodity but a necessity.
Refurbishment of Hotels, Accommodation Facilities and Restaurants – Interest Rate Subsidy Scheme to support hotels, restaurants and holiday accommodation providers in upgrading their operations and product offering so as to provide new and improved services.
SME Development
ERDF Innovation Actions Grant Scheme (Environment) – Competitive grant scheme supporting innovation in Small and Medium-sized Enterprises through investments in environmentally friendly technologies.
ERDF Small Start-up Grant Scheme – The ERDF Small Start-up Grant Scheme supports the growth of new enterprises having less than 50 employees.
Exploratory Award – Participation in FP7 and CIP programmes can support SME’s in strengthening their competitiveness through:
Innovative Start-ups – New enterprises need a mix of resources and support in order to flourish. Most start-ups seek external guidance, assistance and finance.
SME Development Grants (First time trade fair participation / Expert support)– The main aim of the incentive is to support Small and Medium–sized Enterprises (SMEs) to develop and diversify their activities, penetrate new markets, increase competitiveness, develop new products and services, and consolidate their existing market share.
Research and Development
ERDF Research and Development Grant Scheme – Competitive grant scheme supporting Research and Development activities that lead to the development of new or significantly improved products, processes or services.
Experimental Development Tax Credits – Experimental Development is the acquiring, combining, shaping and using of existing scientific, technological, business and other relevant knowledge and skills for the purpose of producing plans and arrangements or designs for new, altered or improved products, processes or services.
Grants for Cross-border Collaborative Research and Development – The collaborative R&D Grant Scheme supports Maltese enterprises that carry out an industrial research or experimental development project in collaboration with other enterprises. The project should lead to the development of innovative products, processes and services based on advanced technologies.
Industrial Research and Experimental Development Scheme – Industrial Research is planned research or critical investigation aimed at the acquisition of new knowledge and skills for developing new products, processes or services or for bringing about a significant improvement in existing products, processes or services.
Loan of Qualified Experts – Small and Medium Enterprises (SMEs) can benefit from the temporarily engagement of a highly qualified expert to work on R&D&I projects. In this way SMEs can access new knowledge and increased innovation capabilities. The expert will help the SMEs to carry out an Industrial Research and Experimental Development projects.
Preparatory Technical Feasibility Studies – Since Research & Development initiatives are associated with high risk it is advisable that enterprises undertake technical feasibility studies to determine that the key elements of the proposed research project are based on sound principals.
Registration for Intellectual Property Tax Credits for SMEs – This incentive is aimed specifically to SMEs that after conducting an approved Industrial Research or Experimental Development project would like to seek, obtain and validate patents and other intellectual property rights.
The tax credit may cover costs incurred in the 24 months after the R&D project was completed. The value of the tax credits will be based on:
Research and Development Clusters – The objective of this scheme is to support formal collaboration between enterprises by assisting in the setting-up, expansion and animation of innovation clusters. The aid will be provided exclusively to the enterprises operating the cluster which must have the sole purpose of promoting Industrial Research and Experimental Development.
Royalty Income from Patents and Copyrighted Works – The objective of this initiative is to encourage researchers to exploit intellectual property through the licensing of patented knowledge and copyrighted works. The scheme should also encourage investment in research and knowledge creation and exploitation of intellectual property.
Get Qualified [Training]
Expression of Interest for Training Providers – Call for Expression of Interest (EOI) by Awarding Bodies or representatives of Awarding Bodies providing certifications and qualifications that may be considered eligible for the tax incentives offered under the Get Qualified Scheme.
Get Qualified – Get Qualified is an initiative that supports the personal development of individuals for the achievement of qualifications and certifications required by industry. The incentive is applicable to individuals following a course of studies leading to a certification, diploma, degree or post-graduate degree courses.
Malta Enterprise Scheme
Gateway to Export – Malta Enterprise (ME) administers an initiative aimed at encouraging Micro and Small Enterprises to assess whether or not they are ready to venture into new markets through their exports.
Access to Finance
Interest Rate Subsidies – Loan Interest Rate Subsidies to support new investment projects undertaken by enterprises engaged in manufacturing.
Loan Guarantees – Loan Guarantees facilitate access to finance to assist enterprises in the acquisition of capital assets that will lead to a more effective and efficient production and supply of service/s. The main objective of this incentive is to support new investment projects undertaken by enterprises engaged in manufacturing.
Soft Loan – Soft loans support enterprise through loans at low interest rates for part financing investments in qualifying expenditure
Investment Aid
Investment Aid Tax Credits – Investment Aid Tax Credits support enterprise in investment and job creation. The scheme is mainly focused on attracting new investment projects and promoting expansion or diversification of existing enterprises.