Issue link: https://maltatoday.uberflip.com/i/1380662
11 maltatoday | SUNDAY • 6 JUNE 2021 OPINION Malta's investment and asset services can grow further from actually taking place (a case in point being Moviment Graffitti's recent protest against the Fortina jetty at Balluta). Heck, you can even inhale it direct- ly through your nostrils, in the form of particulate construction dust… there is, in fact, no escaping the side-effects of our unstoppable 'political-industrial construction complex'. (No, not even by watching foreign TV. The extent of Mal- ta's environmental degradation is now even the subject of French documenta- ries…) Above all, you can also detect it in cer- tain recent political changes: especially at local government level… and so far, with a specific emphasis on Gozo (unsurpris- ingly, the main battlefield in this particu- lar war). To the best of my knowledge, it was absolutely unprecedented that all 17 of Gozo's local councils – with all their di- vergences of opinion (and I'm not just talking politics here) – would get to- gether to form a common, unified front on this issue: unanimously complaining about the alarming rate of urban and ru- ral destruction of their island… and urg- ing government to 'do something about it: FAST'. And there are other examples, too. Personally, I don't begrudge President George Vella for suddenly waking up to this same problem… but only when it happened to affect the Zejtun street he himself grew up in as a child. It is, after all a bit like my own 'first bicycle' expe- rience: sometimes, it takes the emotional spark of a childhood memory, to trigger the deserved practical response… So even if his epiphany came a little late in the day: President Vella now has to be accounted among the many who are at least trying, in their own way, to 'do something' about a situation that the government persists in ignoring alto- gether. And one the first things he did was organise a National 'State of the Na- tion' Conference… in which I can't help but note that the emphasis, so far, has been almost entirely on this one issue alone. Meanwhile: for much the same reason, I won't climb onto the bandwagon which is currently gawping at Tonio Fenech's contribution to that conference last Fri- day: when the former Finance Minister finally admitted that his government had been WRONG to expand the de- velopment boundaries in 2005/6 (i.e., a good 14 years after practically every sane voice on the island had told him pretty much the exact same thing, direct- ly to his face…) And OK: admittedly, Fenech's sudden shift in perspective may have had less to do with random childhood memories… than with the simple fact that the Na- tionalist Party is itself no longer in gov- ernment; and can therefore no longer actually do anything about a situation it now finds so easy to complain about… In fact, it just never ceases to amaze me how former ministers always somehow manage to 'see their error of their ways'… but only ever at a point when it is the 'other party' that is responsible for pre- cisely the same old, catastrophic policies that they themselves had championed in the past... But never mind all that, for now: even if it comes a good two decades too late, there is still a lot of value in Fenech's rec- ommendation to: a) disband the Planning Authority, and create an 'Environment Authority' instead, and; b) to "revise the local plans in favour of the environment". As things stand, then, the most that can be said for Fenech's belated admission is… such a shame, that he himself didn't have the 'courage' to ever conduct that same reform when he actually had the chance. That way, the country might at least have been spared just a little bit of the environmental damage it has had to sustain, over the past 20 years… But that has to be weighed against two important considerations: one, that To- nio Fenech (like the President, the KTP, the combined local government of Gozo, all of Malta's civil society, and practically every other relevant entity on the island) now acknowledges that this 'political-in- dustrial construction complex' must be dismantled, sooner or later… …and two, that – contrary to the opin- ions of many (including, sometimes my- self) – it CAN be dismantled. Not, per- haps, in time to save what's already been lost; but certainly, in time to reverse the loss of even more in future. By my count, that leaves us with only two 'relevant entities' that have yet to make that all-important transition them- selves; and which still do not comprehend that, unless we undertake an urgent root- and-branch reform of the entire planning sector today… there will, quite frankly, be nothing left to preserve tomorrow. … and oh, look: they just happen to be the government of Malta, and the Plan- ning Authority: i.e., the only ones that might actually be able to make a mean- ingful difference… OVER the past years, Malta has estab- lished itself as an important financial services jurisdiction and the industry has grown significantly, providing an important contribution to exports, eco- nomic growth and employment. Building on these past developments, the Maltese authorities are determined to ensure this sector continues to con- tribute positively to the economy in the future. My view on, specifically the investment services and asset management sectors, is that firstly we must continue building on our strengths which attracted vari- ous investment services firms and asset management companies to our shores. This also includes having a stable and robust macro-economic environment, with low inflation rates, strong eco- nomic growth and a sound budgetary position. Whilst the COVID-19 pandemic has surely hit the Maltese economy hard, the past efforts to diversify into new sectors, improve competitiveness and create fiscal buffers, helped to improve its resilience and this should also facili- tate the economic recovery as the health crisis subsides. Malta's highly educated and English-speaking workforce con- stitutes another important strength in these sectors. Moreover, over the past years, various financial services clusters have devel- oped within the industry, creating in- tra-industry linkages which contribute to more local value-added. Last but not least, Malta's attractive tax system has also been a relevant factor in the devel- opment of the financial services sector over the years. At the same time, it is important to acknowledge certain weaknesses which may impact the future development of the investment services and asset man- agement sectors in Malta. In particular, the competent authori- ties must be equipped with the neces- sary resources to meet the needs of the industry in an efficient and effective manner. This requires more effort to digitalise certain processes and more investment to develop further human resources' skills in asset and risk man- agement, as well as in anti-money laun- dering and compliance. Indeed, in recent years, there has been more emphasis in the sector on the lat- ter aspects but in this regard, Malta's reputation has suffered. The recent positive outcome of the Moneyval outcome is a welcome pos- itive step in this regard and we should continue with these efforts to continue to improve Malta's reputation in the in- ternational scene. The future development of the in- vestment services and asset manage- ment sectors in Malta requires that we continuously assess the environment around us so as to be able to exploit the opportunities presented. Being an EU member state, financial services companies established in Malta benefit from the 'EU Passport', grant- ing them market access in all the 27 EU countries. This provides for various opportunities for further growth of the sectors, particularly in the context of Brexit. Fintech provides another important opportunity and we should nurture fin- tech start-ups whilst fostering closer collaboration between the financial ser- vices industry and technology firms. The European Green Deal and the forthcoming EU Renewed Sustaina- ble Finance Strategy provides another important opportunity and we should strive to develop the necessary legal and regulatory framework in this area. Finally, we should remain vigilant for any threats that can pose a risk to the future development of the industry. Investment in financial services firms can be quite volatile because they have limited physical investment in the country. Furthermore, the industry is very competitive and other European juris- dictions are also introducing innovative frameworks and are making headwinds in fintech. There is also increasing international pressure, both from the OECD and also at an EU level, for more tax harmoni- sation, which could impact Malta's tax attractiveness in this industry. However, we should not be discour- aged by such threats. Rather, acknowl- edging them enables us to refocus our efforts for a dynamic, innovative, effi- cient, competitive high-quality financial services industry that continues to at- tract investment to Malta, thus generat- ing economic activity and creating high value-added jobs. James Grech James Grech is a Labour candidate on the 2nd and 3rd districts and a former MEP candidate