Sectors such as advanced manufacturing, life sciences, ICT and aviation will underpin Malta Enterprise’s FDI activities going forward. This builds on the considerable success which this European island nation has already achieved in building its economy. Jo Murray asks Peter Meli, Director of the UK Malta Enterprise office, in which sectors Malta’s expertise lies and which locations will prove to be rich FDI hunting grounds over time.
The Republic of Malta sits in the centre of the Mediterranean Sea, between southern Italy and the north-east coast of North Africa. Strategically, Malta has always been an important location, with the Moors, Normans, Spanish, French and British all seeking control over these Islands. Independent of the UK since 1964, Malta is a member state of the Commonwealth of Nations, and was admitted to the United Nations in 1964 and joined the European Union in 2004; in 2008, it became part of the Eurozone. It is an archipelago of three islands – Malta, Gozo and Comino – with Malta and Gozo being inhabited. The Islands are mostly known as an attractive tourist destination, but there is so much more to discover from a commercial and business point of view.
Malta’s resources are primarily its people. There has been extensive investment in education and training since the 1950s which has resulted in a well-trained, adaptable and highly skilled workforce. This factor has enabled steady growth over the decades, even during international economic downturns.
The first sector that underpins the economy is advanced manufacturing. Training and education have put a shine on the talent base and attracted the likes of Trelleborg, the Swedish engineering group, which was among the first to set up in the country in its former guise as Malta Rubber (Dowty). The list of corporates with Malta-based operations nowadays includes some truly global players such as: De La Rue, Playmobil, Methode Electronics, ST Microelectronics and Toly Products, which amongst their clients can enlist household names such as Chanel, Christian Dior, Daimler Chrysler, FIAT, Ford and BMW amongst others. Today, this sector and its related activities contributes over 13% to Malta’s GVA (gross value added), making it one of the main pillars of the economy.
For Malta, the advanced manufacturing sector can be divided into a series of specific sub-sectors, namely: automotive components, electronic components, medical devices, precision engineering, pharmaceuticals, security printing and injection moulding.
“Manufacturing in Malta is not about volume but value added,” points out Mr Meli. “We are focused on light engineering that requires a combination of know-how and manual dexterity.”
Of course the attraction of Malta as an advanced manufacturing location (as well as a life sciences and aviation location) is owed partly to its highly developed logistics sector which contributes significantly to the success of just-in-time manufacturing in the country. It has got the movement of raw materials and the shipping of finished products down to a fine art, and this allows this Mediterranean location to compete effectively with low-cost operations in the Far East.
Operated by CMA-CGM, the Malta Freeport is the 3rd largest in the Mediterranean, handling over 3.1m TEUs annually. The Freeport was developed as a trans-shipment container terminal and provides deep water quays equipped with state-of-the-art handling equipment. It is linked by regular services to over 120 ports worldwide. An established network also connects Malta Freeport to over 65 ports in the Mediterranean and the Black Sea.
Malta’s Grand Harbour acts as another logistics asset for the country. Operated jointly by Portek of Singapore and Tumas Group of Malta, Valletta Gateway Terminals offers RORO, containers, trailers and conventional cargo facilities. Then there is the Malta International Airport, which is connected by direct flights to most major European and regional cities, with aircraft carrying both passengers and freight.
Returning to Mr Meli’s three key sectors that underpin Malta’s economic growth, the life sciences industry comes next. This is not surprising given that Malta ranks 5th globally for its health sector performance. The most highly developed sub-sector is the production of generic pharmaceuticals. It helps greatly that Malta is a European Union reference state, giving certified operators access to the whole EU. Furthermore, legislation allows for the early development, testing and stockpiling of products which ensures that a generic pharmaceutical product can be first to the market upon expiration of the patent held by a branded manufacturer. Teva, Actavis, Siegfried, CombinoPharm, StarPharma, Pharmacare and Aurobindo are all present in Malta.
A further sub-sector is medical devices with companies such as Baxter, Cardinal Health and Metallform having substantial operations here. Then there is health tourism catering to clients across Europe and North Africa. Of course the standard of healthcare is key but so too is the fact that all training and treatment is carried out in English, as well as the very competitive costs. There is no doubt that growth of this sub-sector is inevitable with the planned expansion of the general hospital on the island of Gozo in line with the opening of a campus by Barts.
Mr Meli points out, that to compound Malta’s activities in the life science sector, Malta Enterprise has initiated the development of a Life Sciences Park, located alongside Malta’s main general hospital, a modern Oncology Centre and the University of Malta. This establishment currently comprises biology lab spaces, chemistry labs and related ancillaries, all designed to allow companies to focus on carrying out their main activity. Interest in the facilities has been very high, with a substantial number of laboratory spaces having already been allocated to various operators, both as R&D facilities for existing companies and as entirely new projects especially for start-ups. The facilities are located in two distinct buildings; the Life Sciences Centre and the Malta Digital Hub.
Finally, aviation is expected to generate a lot more FDI, building on an excellent reputation for aviation maintenance, repair and overhaul (MRO). Lufthansa Technik, SR Technics and EasyJet have already harnessed Maltese aerospace expertise. This expertise runs the full gamut of: MRO, flight training, component manufacture, R&D&I on unmanned aerial vehicles, back office support and call centre operations, and aviation ICT.
The aircraft registry is also an important component of Malta’s aviation FDI strategy. “We are trying to emulate our shipping registry by having a similar success in our aircraft registry,” says Mr Meli, pointing to Malta’s flexible, competitive legal structure as a key enabler.
The Maltese aviation cluster has undergone significant investment, mostly centred on the Safi Aviation Park, a specialised industrial area designed to provide secure, airside facilities for the industry, particularly within the MRO sector. While a number of aviation companies are already operating within the perimeter of the airport, the Safi Aviation Park is designed to bring the cluster closer together. Four new hangars are under construction along with a common apron of approximately 4,600m2 as well as a newly constructed maintenance route, all in accordance with ICAO standards.
Cutting across these three sectors are two additional areas of expertise offered by the Maltese talent base. These are ICT and R&D&I which facilitate almost all economic growth being pursued in the country. “There is great interest being shown in Malta at present,” says Mr Meli, “and we are capitalising on the current scenario.”
He continues: “Our traditional markets from which FDI into Malta originates are Germany and the UK but we are investing FDI efforts in Europe in general, the USA and the Middle East in particular.”
He points to two key selling points. The first is Malta’s high level of productivity derived from the highly skilled labour force; the second is the attraction of Malta itself given the incentives it offers, the excellent quality of life and safe environment, and its long term economic, political and social stability. All this points to an economy which has steadily moved up the value chain since the early days of Malta’s industrialisation, all underpinned by a long-term, continuous investment in the country’s main resource – it’s people.