Interview with Mr. William Wait, Chairman - Malta Enterprise

MALTA: Interview with Mr. William Wait, Chairman - Malta Enterprise


WF: Malta Enterprise has over 50 years of history; looking back at the critical role played by MDC in supporting the development of industry in Malta, how does Malta Enterprise operate today?

WW: Malta Enterprise has a board of directors who come from industry and business, and then it has a management team. So, there's a CEO and the chief officers, and those are the people who are working on a day-to-day basis in Malta Enterprise. In my case, I chair the board, so I am not a full-time employee of Malta Enterprise. Malta Enterprise is the entity responsible to attract FDI [foreign direct investment] into Malta. From 1967 to 2003, when along with the Malta External Trade Corporation (METCO) and the Institute for the Promotion of Small Enterprise (IPSE) it was merged into Malta Enterprise, the MDC played a critical role by assisting investor, Maltese and foreign to exploit business opportunities and generate the country’s economic development.

Over the last 50 years ME has re-engineered its operations to keep pace with the fast-moving business environment. The organization nowadays is practically in one way or another responsible almost for all economic activities excluding financial services, gambling and betting activities. During this period ME was responsible both to attract new FDI to Malta as well as to facilitate the expansion of all businesses being local or foreign owned to expand their operations in Malta. The organization has managed to carry out this function very well as evidenced by the important and critical FDI it has attracted that shaped Malta’s economic and social spheres. We are proud to say that FDIs that have set up in Malta in the early 60s are in their majority still present in Malta and actually expanded their Maltese business operations several times. Today we adopt a micro targeting approach to identify the companies that can really add value to the Maltese economy.

Over the years, the profile of Maltese subsidiaries gradually shifted from labour intensive to fully fledged, often vertically integrated, autonomous operations, competing not merely on cost by also by applying design, innovation, R&D and technology. The Corporation was always quick to replace operations that did not survive the industrial shift with high added value ones to the extent that the manufacturing sector continues to play a very important role in the Maltese economy.

Our strategy is very simple and based on five pillars. The first pillar is what I call the traditional pillar. That is, trying to attract FDI into Malta. Over the last few years, we've had a lot of success with this. Probably the largest one and the most noticeable one was Crane Currency, which is the number three currency-printing company in the world. They opened up a brand new, very large factory here in record time. It was about three years from the time the land was allocated to the time they started operations. This made Malta very attractive in terms of currency and security printing. We already have the number-one company here in Malta, which is De La Rue. So, that's the pillar that I refer to as traditional. The next pillar is very important: it is those companies that have already come to Malta and that we want to keep here. We consider ourselves lucky, because a lot of companies that came here 50 years ago are still here. This includes companies whose names have changed several times over the years., these include Playmobil and Trelleborg. And the idea is that these companies find themselves comfortable in Malta and as Malta Enterprise, we facilitate their remaining here and their growth as well.

The third pillar consists of companies owned by Maltese entrepreneurs that have now grown to be a certain size—which are sometimes as big as the foreign companies that have existed here—they sometimes have a strategic advantage when they focus on food and beverage. So, for example, Farsons, Foster Clarks and James Caterers, Consolidated Biscuits. They're all in the food and beverage industry, and they're all Maltese-owned. Over the years, they have been growing at a steady pace and looking at export opportunities as well.

The fourth pillar is very important as well. Not only for Malta, but for any industry in the world. It is focusing on the small and medium enterprises. To be able to focus more on them, we have a division of Malta Enterprise called Business 1ST, which is actually a public-private partnership with the GRTU, the small-and-medium-enterprises chamber of Malta. Business 1ST offers a one stop shop service for business. The focus is to create strategy and policy that comes from the players themselves, thus being very hands-on and eliminating bureaucracy and red tape as much as possible making the process to start up a business; obtain certificates and licenses easier from one office.

The fifth pillar – a crucial one – is that of looking at new sectors and new niches for the future. Where are we going? On developing new economic niches, we are working on a number of areas including medical cannabis, logistics and AI. One example would be the pharmaceutical sector. At first we started attracted companies producing generics. However today we have a cluster of companies producing APIs, developing dossiers, R&D, medical cannabis.

The strategy around these niches is to create an ecosystem for each sector. For example, in medical cannabis, we have already managed to attract manufacturers of finished products. We are now working on attracting companies which will support these manufacturers and can offer their products and services to other European jurisdictions. Apart from this, we are looking into issue such as registration of IP and clinical research.

We sometimes look at challenges as opportunities. We also look at certain things happening in other countries as opportunities for ourselves. We are Malta; we are a small country. So we don't want industry that employs 2,000 or 3,000 people. I don't know what would happen if, for example—and this is only an example—a company comes over and tells us that they want to employ 5,000 people. Probably, it would be very difficult for us to accommodate, because we have our limitations. Limitations of size, and resources, including human resources.

WF: What are your major challenges?

WW: The major challenges we have are people and space oriented. As you are aware, in 2017, Malta was the president of the of the European Commission. I chaired the Working Party for Industry. We were very active. I think we did about seven working parties, which involved discussions. The message that we tried to put forward and that we continue to put forward at every opportunity is that as Europeans, we need to realize that we are not operating alone in the world. We have the United States, India and Asia as our competitors. India and China alone are bigger than Us. Australia in size is probably bigger than the European Union as well. sometimes, as Europeans we try to put barriers that don't affect other people but affect us only.

How are we tackling these challenges? In terms of size, we are very careful with what industries we accept in Malta. We do not wait for business to come knocking on our door. We adopt a macro targeting approach and identify companies that Malta can offer them an opportunity. As I was saying earlier, if someone comes to Malta and wants one square kilometer of factory space, we would most likely give thanks for considering us, but we have our limitations.

In terms of people, we practically have full employment. The number of unemployed people is very small. As a government and also as a person, if there is even one person unemployed, I am concerned. I want every person who is able and willing to work. So, unless everyone is working, I won't rest. Having said that, we now have probably over 30% of the working population in Malta, who are not Maltese. When I say Maltese, most of them would be from the EU, including Spanish. The number of Spanish people working in Malta is 1,300 double the one that was recorded in 2014. They come with families. The Spanish community is quite large. Coupled with that, we have 100,000 Spanish tourists who visit Malta, that is a 31% increase from previous years. So, Spain is the sixth-most-important player in the market for Malta. Although Spanish tourists who come to Malta probably come for attractions that already exist in Spain, like sun and the sea, they still find Malta attractive. And it's the same for us. Maltese visit Spain for football, Barcelona, Madrid, so there is that commonality.

I think the most important aspect in any foreign direct investment is having good legislation. As Malta Enterprise, we have two acts that really define what we do, the Malta Enterprise Act and the Business Promotion Act. Of course, these are complemented and supplemented with legal notices and other policy documents. When it came, for example, to medical cannabis, the one main reason why we are attractive is because we enacted a law that allowed the operators in that industry to see clearly what they can do, what they cannot do. Sometimes you hear people saying that if there isn't a law, it's better, so that people can be more flexible. As the world is developing, the really good players want parameters – clearly defined ones. That is why when it comes to blockchain, it's the legislation that is helping us.

I see it as very important that any future growth needs to be properly supplemented with legislation and infrastructure. For example, just to give you an idea: the life-sciences park. A few years back, Malta Enterprise launched into the life-sciences sector. The life-sciences park was built close to the main hospital. That infrastructure has attracted the players to come in and operate from there. We have seen, even historically, when Malta was changing from a military base into an industrial zone because at that time, we were still under British rule. In 1979, the British military left, so there was a joint plan with the British to decide what would happen with all of those people who had been working with the British military. That is when industry started happening, and that's when the industrial estates started being built with the British. At that time, we also had legislation that would be impossible today. We had a tax-free period, we had grants; the EU today would not allow us to do those.

At that time, it was also an era when people were coming to Malta because the labor here was cheap. Today, we don't consider ourselves as a cheap location in terms of labor. If you want to produce cheap t-shirts or sandals, you don't come to Malta. Malta is not the most expensive country in the world and we’re very competitive. You come here for value-added services, for quality operations. This brings another challenge: having the people necessary to do that work. And that is where Malta Enterprise and a lot of other companies work very closely. We have MCAST, which is the Malta College for Arts, Science, and Technology. University of Malta and other private colleges. We also work closely with Jobsplus, the agency which helps supply and demand of employers and job seekers, to ensure that everyone is on the same page.

One of our advantages is being small. Being small means we have access to decision makers very quickly. That helps us to adopt things very quickly. Together with the players that came here, and the institutes and universities, we quickly devised specialized courses and specialized trainers. Some of the training had to come from outside Malta, but we quickly supplied that. Same thing when Crane Currency came to Malta. We needed more specialized people, because although it's printing, it's security printing which is a different world. In other industries this happens as well. By attracting people to come and live here, this brings other challenges. The island is small, and it has a lot of people and infrastructure can be under stress. However, the government is focusing a lot on the infrastructure of the country. And that's where the Spanish players come in, to build one of the bridges. Today, a couple of other bridges are being built with their investors.

So, although Malta is a small country, the smallness has created a lot of wealth not only for ourselves, but also for EU countries and others that aspire to become part of the EU. I feel happy about this. I think we need to understand that we live in a global world, and even as I said earlier, we cannot work in silos. The fact that the country is able to create wealth not only for its own people, but for people outside the country, that is very positive in my opinion. Now, of course, we are not the size of America, but in our smallness, I think we do our bit for the world. You would find the majority of Maltese are very proud of their country. Generally, we Maltese are very proud.

WF: Malta is a frontrunner in blockchain, Fintech, and AI. Last week, I attended a conference organized by MFSA and Finance Malta where they talked about the regulatory sandboxes. What is your opinion on Malta and its eagerness to remain at the forefront in terms of new technology?

WW: We moved from an industry based on low paid wages to an industry which is expanding on expertise and technical knowledge of expertise, R&D and managed to attract the development and production of high-end products which are used by world renowned brands. Undoubtedly as we are moving to lead and attract companies operating in innovative technological areas, the need for investors to interact and work with university and research centres increase significantly. As an organization we are experiencing this and in fact we have higher interest than in previous schemes in our schemes related to R&D and collaboration with research centres. As Malta Enterprise we also form part of EU networks, collaboration with other institutions under various programme such as RELOS, Horizon 2020, Eureka. As a forward-looking country enabled by strong infrastructure and multiple links to the rest of the world, Malta is venturing into new niches to become a home for those technologies that will be shaping the future such as DLTs, bioinformatics; cybersecurity; AI and IoT.

Malta has worked diligently to establish a very competitive institutional and legislative framework through which companies in these sectors can thrive. We have attracted significant interest and investment, effectively becoming the leading distributed ledger and virtual currency jurisdiction and is in fact being considered as the ‘blockchain island’. Besides supporting private investment to grow, the government with its pro-business strategy, is also looking at promulgating the use of such technologies by the Maltese population in their everyday life.

What are the competitive and comparative advantages of Malta as an investment destination? Tell us about the keys to successfully compete at the global level.

Malta’s nimble jurisdiction; offering a personalized attention to investors; access to decision makers; human resources flexibility, quality and cost; political and social stability; strategic location within the EU with easy access to nearby markets including Africa; English as the official language; efficient transparent tax system company and personal; excellent quality of life and safe environment; competitive cost structure with low social costs; pro business approach; developing business friendly legislation in emerging sectors; at the forefront to lead and embrace technological innovations put Malta on the map as an ideal business location to start a new venture; expand and grow your operations. The fact that Malta is small provides the flexibility to act fast.

WF: Malta’s manufacturing industry has progressed to highly technical advanced manufacturing and smart industry. What is Malta Enterprise doing to ensure that this growth remains?

Industry remains a very important pillar for the Maltese economy both in terms of the gross value added generated as well as in terms of employment. Over the years the manufacturing sector has re-engineered itself towards high value-added activities. In 2018, the manufacturing sector contributed to 8.2% of the total Gross Value Added generated by the Maltese economy. Furthermore, when comparing 2018 with 2017, the gross value added generated by the manufacturing sector increased by 8.3%.

The manufacturing sector remains the second most important contributor to employment in Malta. In fact, as at the end of December 2018, manufacturing contributed to 10.6% of the total full-time employment in Malta. Employment in this sector over the last couple of years has remained stable. Comparing 2018 with 2017, full time employment in manufacturing increased by 2.9%. Part of the high value adding industries that Malta has developed over the years we find electronics, precision engineering, the maintenance repair and overhaul of aircrafts; automotive; security printing; pharmaceuticals and life sciences. These are only few of the high value adding activities that Malta has managed to develop during the years. Furthermore, key companies operating within these sectors have been approved various expansion projects by Malta Enterprise in the last years.

To develop these sectors, together with other stakeholders, invested significantly in the appropriate infrastructure. Tangible examples include the Malta Life Sciences Park and investment of circa 25 million to develop a state of the art for life sciences activities and the Safi Aviation Park which until today still sees significant investment to develop new hangars and facilities for the aviation cluster.

Malta Enterprise, together with Malta Industrial Parks, ensures that adequate infrastructure is in place to house and support the high value added, technological companies that are being set up. Currently works on the Gozo Innovation Hub in Xewkija Gozo are at an advanced stage. The complex, made up of 9,000 sq.m. will be housing knowledge-based companies. Malta Enterprise was responsible for the Gozo Fiber Optic Cable Project, an investment of €3.5million that will continue to increase Gozo’s digital connectivity and economic resilience.

I think one of the reasons Malta is successful—and this is very, very important, in my opinion— is that when it comes to business, when there is a government change, one continues to build on the good that previous one did and look new strategies to attract new investment. So we have been building, one stone on top of the other. The worst thing that can happen to a country, an economy, or a company, is that a new person comes in ... a new prime minister or a new CEO and they decide that their predecessor did everything wrong and they start new. There, you're starting all over again. In our case, we built on past progress. One very important pillar of Malta Enterprise’s strategy is taking those companies that have been in Malta, that came here under different governments, and ensuring they stay here and grow here. We don't care if they were brought in by a nationalist or by a labor government. Our priority is that they stay here, they grow here, they benefit the economy and our people; and not only our people, but also the people who have found Malta and made it their home. That is what makes us proud, and that is what I believe very strongly makes us special. And it makes it silly for any organization, any country, to start life all over again each time there is a change in administration or whatever. I think we have proven that.

WF: There is still much room for further cooperation between our two countries. We need to explore the possibilities available for Spanish companies coming to Malta, in sectors such as infrastructure, solar panels, construction. What would be your message to them? How would you like to attract the attention of Spanish investors?

WW: I would say to the Spanish people that, first of all, there are a lot of commonalities already between the two countries. As we said, I think we are people who enjoy life. We enjoy families and the social aspect of our being. We're not people who are here in this world only to work. I think both countries believe in a strong work-life balance. That alone makes us attractive. We're in the European Union together, so that makes us brothers and sisters, I would say. Already, 100,000 Spanish tourists visit Malta, and that's a year-on-year 31% increase. So, with connectivity, which is very important for any two countries who wish to work together, without proper connectivity, it won't happen. Connectivity is improving, so people want to come to Malta to do business, and now they can fly very conveniently. The distances are not far. There is already an expat community in Malta. There are 1,300 Spanish people who already work here in Malta.

Both countries are properly represented in terms of diplomacy. We have a Spanish ambassador here. I believe Malta has a Maltese ambassador in Spain. So both countries have that commonality on a diplomatic level. We use the same currency. I think a lot of Spanish people speak English, and we speak English. I also know a lot of people who speak Spanish here. Also, Malta is a positive country. Malta is a welcoming country. We welcome everybody here. We want people to come here. We want people to experience our hospitality. We want people to be successful here.

We attract people to Malta to ensure that they are successful. The more successful they are, the more successful Malta is and the happier we are. We can see successful Spanish companies, in the pharmaceutical sector already operating here. Also in the gaming industry. There is already a base in Malta. Why not join them? Come here, work, earn money, grow your business, and also have some fun.

There is scope for Spain and Malta to collaborate and work closer, through European Union programmes, for example, work on research and development. As EU countries, when we compare ourselves to others like South Korea or America, we fall short when it comes to R&D. We don't rank highly as the European Union, or even as Malta. There is room for us to benefit R&D focused industries. This will tie in with the medical cannabis. So far we have approved 20 companies for medical cannabis. I think 46 applied, and 20 were approved. Now, we're looking at creating an ecosystem around medical cannabis that includes clinical trials, it includes added benefits. Not only coming here, having something be turned into a final product, but also the industries surrounding it. Laboratories and such. We believe that there could be collaboration between the two countries in this aspect as well.