Wednesday, January 18, 2012
Malta's efforts to establish itself as a dynamic, cost-efficient, financial services domicile is paying dividends, according to promotional agency MaltaFinance, which has highlighted that each of the island's financial services sectors, insurance, banking, trusts and funds, recorded solid performance during 2011.
Discussing Malta's success as an international financial centre in a year-end statement, FinanceMalta’s Chairman, Kenneth Farrugia said that: "The growth of the [financial services] sector speaks for itself. If you look at the growth of the funds industry as an example, 15 years ago we could describe the industry in just one word - ‘two’ - because we had two funds, two custodians and two asset managers. Today Malta has over 500 funds and in excess of 100 asset management companies, so the growth has been quite significant, predominantly in the last two or three years."
Today there are over 6,500 people in direct employment in financial intermediation, against the background of a total workforce of approximately 160,000.
The latest statistics released by the National Statistics Office show Malta has had substantial growth primarily in financial intermediation. Financial services are a significant contributor to GDP, edging towards 15% of the economy.
Currently the funds industry is leading the sector, having added over 100 new listings in the first half of 2011. "We’ve had compelling growth in this particular industry," notes Farrugia. "It’s clearly a sign that the industry has become truly international because we are serving fund managers based in the US, Canada, Italy, UK, Switzerland, Czech Republic, Latvia, and beyond."
FinanceMalta said that Malta is seeing substantial demand from a number of hedge fund managers who are choosing to shift their operations to Malta in response to both the rising costs of business and the growing regulatory burden in their domicile. Malta is emerging alongside London, Geneva, Luxembourg and the Swiss canton of Zug, as another European location for fund managers keen to maintain flexible operating arrangements and reduce tax bills, the agency said.
Farrugia highlighted the insurance sector as an additional future area of strong growth for Malta: "A growing body of insurers are finding their way to the island given the firm but flexible regulatory regime and access to excellent support services. Prospects for this sector look to be encouraging with Malta frequently being chosen ahead of competing jurisdictions."
Malta is also an emerging regional hub and key location for wealth managers, family offices, high-net worth individuals and retirees, MaltaFinance reported. Bruno L’ecuyer, FinanceMalta’s Head of Business Development, said: "Given Malta's favourable residency and tax laws, innovative investment vehicles (including specialist funds regimes and trust companies), excellent legal and accountancy services, and a warm and sunny climate, all within the European Union, the country has begun to appeal to a wide audience in this area."
Also, when it comes to the speed of transposing regulations and international legislation, Malta is industry leading, enhancing the territory's appeal, Head of Administration, Dr. Bernice Buttigieg said. "Malta has a clear edge and this contributes significantly to our competitive advantage. In fact, Malta on the EU scoreboard ranks joint first with Denmark. We are efficient in transposing directives or European regulations into our national legislation. The reason behind this is because we’re small but we’re nimble, we can act very quickly and we don’t have a significant hierarchy."
"We used to say that Malta is waiting to be discovered, but I think Malta is now being discovered today. The acceleration of foreign companies coming to the island is a manifestation of that. People are sometimes driven by perceptions, but you need to come to the island, meet with government, the regulator and the operators and get a first-hand view of what Malta is really about. I think when people do that, then Malta is sold to them. We don’t want to keep Malta a secret any more," Farrugia concluded.