EY’s annual attractiveness survey, which it has carried out for the past 16 years, shows a dramatic shift in perceptions among foreign investors as it records the lowest-ever FDI attractiveness index. While the country’s corporate tax regime remains the country’s top selling point, investors highlight Malta’s political and regulatory environment as being of particular concern.

The survey, conducted among foreign companies in Malta, once saw the “stability and transparency of the political, legal and regulatory environment” being listed as the second most important motivating factor for Malta’s attractiveness.  It is now bottom of the list, reflecting “the sentiments shared by any FDI investors on the need to improve governance and tackle reputational issues”.

Foreign investors highlighted two priority areas for Malta’s continued global competitiveness: an improved reputation and brand, and a strengthening of institutions, enforcement and monitoring.

These factors fuelled a 15 percentage point reduction in Malta attractiveness index, from 77% last year to 62% this year, with a full quarter of respondents now stating that Malta is not an attractive FDI destination, up from 15% last year.

Despite the sharp decline in Malta’s attractiveness to foreign investment, a vast majority of respondents claimed they see a future in the country, with 80% saying they believe they will be operating in Malta in 10 years’ time.

The advantageous corporate tax regime is the key factor in this, with telecommunications and infrastructure and the stability of the social climate making up the second and third most important parameters.

Meanwhile, investors continue to point to transport and logistics, R&D and the innovation environment, and education and skills as crucial areas where improvement is required.

The environment also featured high on foreign investors’ concerns, with 94% calling on the Government to prioritise environmentally sustainable practices in its COVID-19 recovery plan. These include funds and incentives to encourage companies to increase their sustainable actions, taxes and disincentives for environmentally unsustainable practices, and stricter environmental laws and enforcement.

EY Malta Country Managing Partner Ronald Attard noted that “Our FDI respondents delivered a strong message on what must be done, and most really want to be here. Now is the time to embrace the message and revisit our future. It is up to us whether to maintain the current course, adjust it or reframe it altogether.”