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Speaking at Monday’s 10th anniversary of the Malta Financial Services Authority, Prime Minister Lawrence Gonzi labelled Malta’s financial services sector as a national success by creating a modern, successful and well regarded finance jurisdiction.
The occasion brought together former finance minister John Dalli and Dr Gonzi, who also serves as current finance minister.
Citing the fact that close to 12 per cent of Malta’s gross domestic product is now derived from financial services and that the sector employs some 6,000 people, Dr Gonzi adds that Malta now has dynamic and innovative companies in retail, corporate and investment banking, in fund management and insurance. Furthermore, many Maltese professional services firms in legal services, accountancy and management consultancy have developed high added value specialist skills in the financial sector, while prestigious overseas concerns have also been attracted to the Islands.
“There are great opportunities opening up for Malta in the EU and in North Africa. We have many skills and benefits to offer; in people, finance, languages, location, property and transport links.
“In driving forward we must not forget that at the root of our success today are high standards in regulation, customer service and corporate behaviour,” Dr Gonzi explains.
Foremost among the priorities felt ten years ago when the MFSA was first set up, were the four objectives of creating the conditions in which our locally-owned finance businesses could grow to deliver a broad variety of advanced financial services to Malta and internationally; making Malta an attractive and competitive location for foreign direct investors in the finance sector; developing the financial services industry as core part of building a strong knowledge-based economy in Malta and providing quality jobs for our people, particularly our university graduates.
“Facts speak for themselves,” Dr Gonzi elaborates, “We have managed to achieve practically all our objectives, thanks to the unstinting efforts of the regulators and all the professional and technical people in the finance industry, who unreservedly embraced my government’s vision as detailed and implemented over the ten year period.”
Turing to the bridging of financial services between the EU and North Africa, the Prime Minister explained that a significant number of locally-controlled finance houses are forging into the EU and into North Africa.
“We have long talked in Malta about being a trading bridge between Europe and North Africa. It is a source of pride for us that Maltese finance companies, using Maltese money and Maltese talent, are at the forefront of building new economic horizons for the nation.
“A critically important component in building a modern and competitive economy is choice. Maltese businesses and Maltese consumers can now choose their products and services from numerous competing suppliers of financial services. That is a wholly beneficial development and is a direct result of creating the legislative and economic conditions the finance sector needed, to have the confidence to invest in Malta.”
He adds, “Our international reputation as a good place to do business in and with, is strong and sound. Let me here pay tribute to the quality of the financial services businesses in Malta – both indigenous and foreign owned.
“In terms of financial services we are the envy of our fellow new EU entrants. Indeed, this year the World Economic Forum’s Lisbon Report singled out Malta - among all new entrants - for its strength in financial services.
“The prestigious international publication, The Financial Regulator, said that Malta is a model of how to move a jurisdiction from offshore to the mainstream in a relatively short period of time.
“The industry and the professional services firms have been consistently enthusiastic and engaged in the offshore to onshore process. And the sector has repeatedly invested in new technology, new products and services and in professional education and training.
“In my opinion, a major contributor to the success that has been registered lies in the fact that Malta’s financial services industry has consistently sought to achieve high standards at all levels.
“High standards matter because consumers have a right to expect them from their financial services providers.
“They matter because our good global reputation as a finance centre and a place of business depends on the world seeing Malta as a responsible and well ordered jurisdiction.
“They matter because businesses that satisfy their customers and treat them well, more often than not, succeed and grow. Above all, for us in Malta, high standards matter because that’s what we as a nation believe is right.”
The cornerstone to competing on the European and international stage, Dr Gonzi stresses, lies in the fostering and growth of knowledge based industries. In this light, Dr Gonzi emphasises Malta’s finance sector is a perfect example of how a knowledge-based service industry can meet the needs of its customers and investors and the wider society in which it operates.
“The finance industry has made a hugely important contribution to providing good jobs and good opportunities to so many of our talented young people. My government is committed to its future success and to ensuring that Malta continues to develop the education and training infrastructure the industry needs.
“The ten-year story of the re-modelling of Malta’s financial services regime has been watched and written about by journalists from across the world. That publicity helped us attract foreign investors in the sector and position the country as a dynamic mainstream finance jurisdiction.
“Now we have to have a new story to tell. We must build on the great success of the past decade.
“We now have the capacity not just to sell our product across the EU but also to lock into the European and world business streams by carving out our niches in the rapidly evolving pan-European market for financial services.
“The single market in financial services has, perhaps, been a long time coming. But now the legislative base is in place and cross-border activity has stepped up a gear in recent months. Now is the time to move forward at speed.
“I am therefore delighted that the finance industry and the public sector have joined forces in the creation of Financial Services Malta, the new brand to promote our attractions in financial services. Its job is to spearhead the international drive to bring more customers to the businesses already here and reach out to mobile foreign investors looking for a competitive and welcoming location.”
Also taking the stage Monday was former Finance Minister John Dalli, who played a prominent role in polishing Malta’s international reputation as a financial services centre.
He recalls, “It has been ten years since we went through the marathon sessions in Parliament that enacted the legislative package which made the Financial Services Sector a reality.
“This followed a year and a half of hard work where with the assistance of experts that we brought from abroad, experts that we had in Malta and with a constant dialogue with practitioners, we built, brick by brick, the edifice that we have today.
“We had been experimenting with financial services when we ring fenced financial activity in an offshore regime that even at that time was causing us problems. We were stigmatised as an offshore centre, grouped with a bunch of other rogue states in the financial area. This has caused the loss of a couple of tax treaties and were put on notice by other countries that they wanted to revise their tax treaties with us. We were being threatened with the abrogation of the double tax treaties we had we the countries that were members of OECD.
“Instead of imploding from the pressure, we took up the challenge of a massive change, spurned on by our vision that Malta’s economic future depended on us being capable to build a high value added services sector.
“I am pleased to see that we have succeeded.”
He identifies the foundations of Malta financial services sector as consisting of:
• Sound legislation which is constantly under review
• Creative product development to keep our sector at the cutting edge of international development
• Professional supervision which has become a respected player in the international arena
• Tough Negotiations in the international environment to maintain our competitivity
• An efficient and cost effective service by our practitioners.
He adds, however, that, “We must realise that the regime that we operate needs constant nurturing.
We operate in a sector that is constantly under scrutiny. We must be careful to adjourn our systems with the times and at the same time make sure that we are not bulldozed into a non-competitive position.
“Also all those involved must also understand that decisions need to be taken that are for the best in the medium and long term even if they seem to be detrimental in the short term.
“Let this be an example of how to build new economic sectors in Malta. We depend on innovation to keep guaranteeing employment to our people and wealth to our nation. We have to keep renewing ourselves and in so doing build this our country as a country of quality.”
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