The Future of Maltese Industry

Last Friday I was a panel discussant at ‘Business Breakfast: Lejn Prosperita’ Gdida’ alongside Minister of the Economy Silvio Schembri, Chamber Vice President Marisa Xuereb, and blockchain expert Jonathan Galea. Panel chair, Jes Saliba, asked about the key challenges and opportunities for the Maltese economy ‘during’ and ‘post’ the COVID period. Here are some thoughts I shared.

• Turn government expenditure into investment: The impact of the pandemic necessitated hefty expenditure by Government to avoid job losses and to ensure that firms have the necessary financing to survive the crisis. The challenge is to turn this hefty expenditure into investment rather than have it serve merely as income to individuals or businesses. Expenditure targeting employees provides an opportunity for training and reskilling, while the financing of business activities is an opportunity for transforming the way of doing business.

• Complement specialised skills with FDI: Investment in education and training is undoubtedly a key ingredient in any recipe for economic success. As more and more individuals undertake specialised training and studies, there is the need to complement these specialised skills with foreign direct investment that provides highly-skilled individuals an opportunity to capitalise on their abilities. These foreign companies need not employ hundreds of workers – we don’t have such skills in abundant supply anyway. Firms employing 20-40 workers are likely ideal.

• Government support to new industries should not come at the cost of reducing support for the existing industry: To build on the country’s past achievements, we must provide continuous support to firms already operating in Malta to ensure that we retain them, and possibly help them expand.

• Ensure economic diversification: Now more than ever, we can appreciate the benefits of a diversified economy. During the past 10 years, the Maltese economy has successfully added financial services and online gaming to the traditionally strong sectors of manufacturing and tourism. The ability to rely on several – rather than one or two – sectors to provide jobs and incomes to the Maltese makes our economy resilient. Case in point is the relatively good performance of the manufacturing, financial services and online gaming sectors during the pandemic as tourism-related business dropped close to zero levels. Thus an economic strategy for Malta should aim for economic diversification through investment in all of these sectors.

• Coordinate initiatives to ensure optimal use of scarce resources: In recent years, we have had several attempts at developing new industries or expanding older ones (e.g. AI, blockchain, medical cannabis, aviation, space, etc.). These are all positive developments but there is the need for an overarching strategy to ensure that the country’s limited human and natural resources are used optimally (in a socio-economic sense).