With 75 countries positioning themselves as international financial centres across the world, deciding on the most appropriate domicile to establish an operation is one of the biggest challenges facing financial services operators. Clearly, the ultimate decision needs to be taken following an in-depth evaluation of a number of considerations.
Malta, a small island state in the heart of the Mediterranean, has quietly emerged as one of Europe’s stable and innovative domiciles. The country’s decision to become a member of the European Union in 2004 and the eurozone in 2008 have proved pivotal to its development as a fast growing finance and business centre.
Malta’s position as an EU member state, and its financial services, presents a compelling proposition for international financial services organisations planning to set up or relocate their operations into Europe. The growth of Malta as an international financial services domicile has so far been spearheaded by very strong growth registered in the investment funds and insurance sectors. Other sectors have also enjoyed very strong growth such as the trusts, banking and wealth management sectors.
Malta is increasingly enjoying recognition as a financial centre of repute because it fulfils all the aforementioned criteria. It has a comprehensive legal and regulatory framework falling under the auspices of a single regulator, the Malta Financial Services Authority. Equally, Malta’s geographic location right in the middle of the Mediterranean makes it a gateway to the EU for non-EU financial services firms and, an open door to the financial services businesses in the Arab world. Consequently, Malta lies in a convenient time zone for doing business across the world: one hour ahead of GMT, meaning office hours coincide with Asia in the afternoon, Europe throughout the day and the US in the morning. On the point of economical and political stability, while global finance centres around the world struggled, Malta’s finance sector not only withstood the effects of the recent economic and financial downturn, but also posted year-on-year growth. Despite the international turmoil, Malta’s finance sector has expanded between 20 and 30 per cent annually and has regularly received high rankings in benchmarking reports.
In 2011, the European Commission viewed the competitiveness of Malta’s economy, in terms of labour productivity, as above average in an EU-wide comparison, with the country improving its ranking in the Global Competitiveness Report 2012-2013 of the World Economic Forum, climbing from 54th place to 47th (out of 144 countries).
In the financial services industry, there are a number of sectors that have become star performers. The funds industry is home to just under 600 funds, primarily consisting of PIFs, but also including Ucits as well as non Ucits. The regulatory framework is supported with an equally comprehensive legal framework allowing such funds to be set up as SICAVs, Limited Partnerships, Trusts and Contractual Funds.
Malta’s operational and service framework continues to strengthen itself as a result of the growth of the industry. Notable is the strong presence of all top four audit firms. Equally, Malta’s legal firms are multi-disciplinary, providing advice across a broad range of financial services areas. Cluster formation is equally evident in the fund industry and insurance sectors.
Malta’s highly skilled workforce is driven by the presence of an excellent educational system wherein students seeking to pursue tertiary education are paid a stipend by the government. Malta also has a sophisticated telecommunications infrastructure, with large bandwidth networks providing high capacity communications to and from the island.
Lastly, Malta’s regulatory processing efficiency is becoming increasingly notable, as are the highly competitive set-up and ongoing costs to operate a fund in Malta. Malta also has some 60 double tax treaties with both EU and non-EU countries.
In conclusion, Malta’s increasing popularity as an EU-based financial centre is gaining traction as is shown by the presence of numerous international financial services providers enjoying success on the islands. All of which bodes well for the future growth of this dynamic centre.
To find out more please visit: www.vfs.com.mt