12 - 18 July 2001

Strengthening Malta-UK trade ties

The United Kingdom is once again participating in the International Trade Fair of Malta, currently being held in Naxxar. British High Commissioner Howard Pearce spoke to David Kelleher about trade between Malta and the UK and relations between the two countries

Relations between the two countries have been excellent over the years. How would you rate the present state of affairs?
Absolutely excellent. In many ways they could hardly be better. One of the things that has struck me since I arrived in Malta is how deep but also how broad the relationship is. Deep in the sense that I think it extends well beyond government to government relations, and indeed throughout the respective societies. There are lots of personal contacts and many Maltese have family in the UK. I am constantly coming across new contacts in a diverse range of fields. There is a tremendous amount of intermarriage between Maltese families and people from the UK. I find myself getting involved in all sorts of things here which go beyond my official duties. It is a full relationship and absolutely excellent. There is a lot of substance and content in this relationship.

There have been ups and downs in the level of trade, not only from the UK but from other countries as well. What is the UK’s view and are there any initiatives to boost trade between the two countries?
Given the size of Malta, we do a lot of trade. We are not Malta’s largest trading partner. I believe we come fourth, however we are a significant trading partner. In per capita terms we sell more to Malta than we do to any other country in the world, except the Republic of Ireland. It is quite an interesting and significant figure. It is not to say that we would not like to do more trade between the UK and Malta. We would love to export more and import more from Malta. We have a very healthy trading relationship and a lot of that goes back to traditional and historical links and so I think there is a mutual familiarity. What we have to beware of is taking each other for granted. I would say that Malta has to beware not to take the UK for granted in the trade and investment sectors and in the general economic field – I think this applies in tourism and it applies in investment.
Back in the late 1960s, early 1970s the UK was the dominant investor. There was a tremendous amount of British investment during that period. I think, however, that we have
tended to rest on our laurels; Malta has rested on its laurels, in terms of British investment. Not that there
hasn’t been any investment in recent years. HSBC’s purchase of Mid-Med bank has been the most obvious high profile example but there are companies like Dedicated Micros that came here 10 years ago producing high-tech video CCTV equipment, or more recently CrimsonWing which provides IT services.
There has also been a certain amount of investment in the financial services sector. And a company based in Manchester is expected to set up a bus manufacturing plant in Hal Far within the coming months. But there has not been enough British investment in recent years, given that the UK invests more overseas than almost any other country in the world – indeed in 1999 it was in the top position.

Could you give any reasons why this has happened?
I think there is one over-riding cause that may lead investors, not only those from the UK, to hesitate about investing or bringing new investment here and that factor is the uncertainty about Malta’s future relationship with the European Union. I think that at the moment an investor does not know if Malta will be a member or not and that issue leads investors to hesitate. They do not know what the key strategic framework will be in the long term. And until that issue is resolved one way or the other, it will continue to cause some investors to hesitate.
I will also say that the attraction of overseas investment is a very competitive market and a market in which every country has to sell itself aggressively and energetically. Over the past 10 years, of course, Malta has had to compete with a new area of investment in Central and Eastern Europe. Malta has certain advantages but these areas have some advantages over Malta as well. Central and Eastern Europe has become fashionable with outside investors.
It is not obvious to the individual who doesn’t know Malta that the island is a good place to invest. Malta’s image to the world is a small sun and sea island. People who don’t know it don’t know that it is a complex wide-ranging economy, with a skilled workforce and an environment that is friendly to investors. That needs to be presented to investors in an aggressive way. In the UK I don’t think that has happened. Malta has not been selling itself and Malta needs to sell itself in the UK by targeting the right type of potential investor; by knocking on people’s doors and telling them that if they want to invest abroad they should come to Malta because there are real opportunities here. The key thing is bringing people here to look around and see what’s going on. Malta has got to be sold and sold proactively.

Do you think that the fact that Malta is not well known could be due to complacency on the part of the Maltese and maybe, even the British?
I think that people have been used to having British companies here. I think there has been a degree of complacency and perhaps the assumption that people come automatically. The global environment has changed and it has become a much more competitive marketplace. You need to tell people that Malta is a good place to come to and it is not obvious until you learn about it.

This is what happened in the tourism industry.
I entirely agree. Tourism from the UK has also been taken for granted in recent years. It has been assumed that British tourists will come to Malta. One has to take into account that there is a generational change going on. The generation in Britain that knew Malta because they served here in the armed forces is now
moving on. The younger generation doesn’t necessarily know about Malta. There has been a lot of worry about the declining number of British tourists but the figures are going up again. There is a simple explanation for this: the MTA has resumed active advertising in the UK media. Tourism is an extraordinarily competitive sector in the UK with very competitive prices. Malta needs to sell itself and raise awareness about the benefits of coming to Malta.

Many tourists complain that they lose more when they change their money into Maltese liri than if they had to go to Spain, for example. Do you see the exchange rate as an obstacle?
It is not so much a matter of the exchange rate than what you can buy with your Pound. I think Malta is not always a cheap place and there is a sector of the UK tourism market where price is the all-important factor. On the other hand, I think that many look for the quality of the product they purchase and not necessarily the price.

You have focused mostly on UK-Malta trade. What about trade from Malta to the UK?
I think one has to put tourism into that equation. One of the things that Malta sells to the UK is sunshine. If you look at trade of hard products, there is a strong imbalance in the UK’s favour, which is understandable. What Malta does have is sunshine. In a sense, if you take the number of British tourists coming here to spend money, then Malta is in fact selling to the UK.

Do you think that new opportunities for investment will be made available to UK investors in the coming years?
There are a number of important opportunities that are expected to arise over the next year or two, especially in the privatisation field. The privatisation of a number of public entities offers good prospects for bringing in new foreign investment and I think that it is not just a matter of the sale of these entities but the fact that they will bring a lot of benefits with them in terms of expertise, growth and expansion.
There are a number of British companies interested in these privatisations and decisions will be taken over the next year or so in this regard. I believe that if British companies are successful in their bids, then this will actually be a real boost to the Maltese economy, and beneficial to the UK and to Malta. We are talking here about some very serious companies who are interested in these privatisations. That combined with the outcome of the EU issue is going to have an effect on the way Malta is seen by UK investors. I also hope to see a more proactive effort by the MDC in selling Malta in the UK as a location for investment. I have spoken to the Chairman of the MDC about this.

What is the UK government’s foreign policy on Malta?
The UK welcomes Malta’s bid for EU membership and we would be more than happy to see Malta become a member of the Union. However, we also respect the will of the people of Malta who, when the time comes, will be able to decide for themselves through well-established democratic procedures. The UK will continue to work closely with Malta even if the Maltese decide to stay out of the EU. If on the other hand Malta becomes a fellow member of the Union, we would continue to strengthen the close relationship between our two countries.

The UK once again has a pavilion at the Trade Fair. Why does the UK feel the need to be present there?
The International Fair is an important showcase for the UK and the range of products which are on offer here. The majority of the participants are Maltese companies selling British products but there are a couple of British companies such as Barclays. The International Fair is an unusual institution in international terms. The majority of fairs are for trade people, yet in Malta it is also a place where people go to spend an evening.
The International Fair is an opportunity for us to show what Britain has to offer. We have a particular stress this year on innovation. The BBC World Service also has a stand to remind people that the World Service can be received here in Malta.