Malta - Economy

Economy

Malta is classified as an advanced economy together with 32 other countries according to the International Monetary Fund (IMF). Until 1800 Malta depended on cotton, tobacco and its shipyards for exports. Once under British control, they came to depend on the dockyard for support of the Royal Navy, especially during the Crimean War of 1854. The military base benefited craftsmen and all those who served the military.

In 1869, the opening of the Suez Canal gave Malta's economy a great boost, as there was a massive increase in the shipping which entered the port. Ships stopping at Malta's docks for refuelling helped the Entrepôt trade, which brought additional benefits to the island.

However, towards the end of the 19th century the economy began declining, and by the 1940s Malta's economy was in serious crisis. One factor was the longer range of newer merchant ships that required less frequent refuelling stops.

Currently, Malta's major resources are limestone, a favourable geographic location and a productive labour force. Malta produces only about 20% of its food needs, has limited freshwater supplies and has no domestic energy sources. The economy is dependent on foreign trade (serving as a freight trans-shipment point), manufacturing (especially electronics and textiles) and tourism.

Film production is a growing contributor to the Maltese economy, with several big-budget foreign films shooting in Malta each year. The country has increased the exports of many other types of services such as banking and finance.

The government is investing heavily in education, including college.

In preparation for Malta's membership in the European Union, which it joined on 1 May 2004, it privatised some state-controlled firms and liberalised markets. For example, the government announced on 8 January 2007 that it is selling its 40% stake in MaltaPost, in order to complete a privatisation process which has been ongoing for the past five years. In 2010, Malta has managed to privatize telecommunications, postal services, shipyards and shipbuilding.

Malta has taken important and substantial steps to establish itself as a global player in the cross-border fund administration business. Competing against countries like Ireland and Luxembourg, Malta has a unique combination of a multi-lingual workforce and a strong Anglo-Saxon legal system. Malta has a mixed reputation for transparency and a DAW Index score of 6 although both would be expected to improve as Malta increasingly adopts more comprehensive legislative framework for financial services. Malta has a regulator, the MFSA, with a strong business development mindset and the country has been successful in attracting gaming businesses, aircraft and ship registration, credit-card issuing banking licences and also fund administration. Service providers to these industries, including fiduciary and trustee business, is a core part of the growth strategy of the Island.

Malta and Tunisia are currently discussing the commercial exploitation of the continental shelf between their countries, particularly for petroleum exploration. These discussions are also undergoing between Malta and Libya for similar arrangements.

Malta does not have a property tax.

According to Eurostat data, Maltese PPS GDP per capita stood at 76 per cent of the EU average in 2008.