Leveraging neutrality, or why it pays to be peaceful

Many foreigners who visit Malta, or perhaps meet a Maltese person abroad, are quick to highlight the positive aspects, describing us as friendly, kind and generous. To a large extent, this is part of our national identity, finding its roots in St Paul’s depiction of the islanders who welcomed him to ‘Melita’.

The Maltese people’s welcoming disposition has long been considered an asset for the country’s economy, serving as an additional positive factor in both individuals’ and companies’ decision to relocate to Malta. However, it can be easy to take for granted the many factors contributing to this perception, including our Constitutional neutrality.

Far from being a historical relic that limits Government’s ability to strike deals with military superpowers, neutrality can be seen as a crucial element of the good reputation Malta enjoys around the globe.

Herald Bonnici, CEO of Malta Government Investment, the state-owned holding company that includes WasteServ, Gozo Channel, Enemed and Malta Air Traffic Services among its assets, says that it can be easy to take our friendly relations for granted.

“We speak with everyone,” he says. “Europeans have no problem to talk to us – we’re part of the EU. The North Africans have no problem to talk to us – we speak their language. The Africans have no problem to talk to us. The guys from the Middle East have no problem to talk to us.

“These are things that we might, at street level, take for granted, but they are certainly not taken for granted at high level negotiations.”

He explains that having a setting for multilateral discussions in which everybody feels comfortable to talk to each other is “crucial” for smooth proceedings and productive outcomes.

“And that is exactly what Malta brings to the table,” he says, crediting this, in part, to Malta’s strictly pacifist stance on the global stage.

The setup of the European, Middle East and North Africa Sovereign Wealth Funds Foundation (EMENA SWF Foundation) leveraged this position by offering Malta as a neutral platform where investors from different cultures can meet and discuss while feeling at ease in their surroundings.

Malta is therefore positioned as not only a location for investment, but also a platform for investment in the region.

Mr Bonnici points out that Malta’s GDP stands at around €15 billion. “When compared to the size of some of the investment providers out there…” he trails off. “Let us just say that some of them have significantly deep pockets.”

These include fellow EMENA SWF Foundation member Bpifrance, whose subsidiaries drew in combined revenues of €1.4 trillion in 2018.

It is evident that Malta’s local economy, while certainly ripe with potential, cannot hope to satisfy the investment objectives of such funds, no matter how well-marketed it is as an investment destination.

“Putting Malta on the table as an investment hub, on the other hand,” continues Mr Bonnici, “presents a better story. We are linking Europe, North Africa, West and East. That ticks more boxes.”

MGI’s efforts are capitalising on Malta’s natural and historical assets to place the country firmly on sovereign funds’ map.

“Our peers now are of a global standing,” says Mr Bonnici, noting that the sovereign fund community is a very respected community, even in the investment circles, “because they bring value globally”.

This remains an evolving story: “The discussion is heading towards becoming more professional and more competitive. This is crucial,” says Mr Bonnici. “We see ourselves evolving into a centre of excellence of governance and financial capability, and finance. It is crucial that this transition continues.”