Insights

This article was written by Mark Anthony Kuflewicz.

Although viewed as one of the most fundamental aspects of the Maltese economy, the ‘maritime’ industry is both poorly categorised and often underutilised. Grouped together informally as a collection of trades rooted in their proximity and  dependence to the sea, the maritime industry is nonetheless one of the best performers in the modern economy of the Maltese islands and continues to be a sector with vast opportunities despite an already exponential growth.

The foundation of the maritime industry in Malta is steadfast and supported by a reliable statistical growth observed over the past years. At heart, the maritime industry is one which is historical to the Maltese; the island nation has provided an invaluable strategic naval base to many empires throughout the centuries, even more attractive still as a merchant hub for trade between the levant and the rest of Europe^[1]. This naval tradition has largely endured, evidenced by the modern prosperity of the Maltese maritime economy.

The Maltese maritime industry, without the effect of any economic multipliers, makes up roughly 15% of the Maltese GDP, with an output growth-rate of 13.9% alongside a total output of €2,303.67 million according to an extensive April 2020 research paper. ‘Value added’ is another aspect where the maritime industry shines, year-by-year beating out the rest of the economy with a 12% growth rate and €853 million in value added. Lastly, the maritime industry offered roughly 12,000 jobs of full-time-equivalent, making up 5% of the total employment in the economy. When including indirect and induced effects (economy-wide impacts of the maritime industry) as multipliers to the current figures, one can expect results almost double in relation to value added and employment: €2,163 million and 20,000 jobs respectively^[2].

The shipping industry has experienced widespread expansion on a global scale. However, some segments experience growth more rapidly than others. While warehousing, which includes storage and bunkering services, remains the largest field in an employment and value-added sense, there is a definite trend towards the ‘maritime services’ sector.

The ‘maritime legal and management services’ sector, for one, has seen continual growth in the Maltese islands and has gradually outpaced more traditional sectors by twofold in terms of growth rate. Although partially a result of a general global rise in demand for shipping infrastructure, the strength of the Malta flag and the Maltese corporate structures greatly accentuates this trend as law firms are often at the charge of the process. The Maltese flag is, likewise, one of proven confidence and lessened bureaucratic restrictions, attractive in great part due to its status as an EU nation with relative ease in vessel and vessel mortgage registration procedures^[2]. This is best showcased by raw statistics; the Maltese flag is the largest in the EU and 6th largest worldwide, with a total gross tonnage registered of 84.27 million as at December 2020^[3]. Hand-in-hand with this is the Maltese corporate structure, with similar benefits in regard to EU member status and ease of both investment and incorporation of companies bundled together with strong fiscal incentives. As continual growth permeates the shipping industry, there is little doubt that both strong corporate infrastructure and staunch legal support will be essential in the modern maritime economy.

A clear sign of most country’s economic prospects is the direction of its capital: investment from both the private and the public sector. Numerous projects have occurred on the islands, ranging from relatively small investments in infrastructure surrounding the deep-water quay and breakwater ports in Valletta and Marsaxlokk, to the €50 Million shore-side electrical supply in the Grand Harbour, greatly reducing the environmental impact of cruise-liners visiting Valletta, important for the environmentally-conscious modern world. This is equally accented by the monumental €303.4 million invested in the Malta Freeport terminal since privatisation in 2004. Most of the capital has since been developed into equipment such as several modern quay cranes and rails as well as infrastructural land development, progressively increasing its area and influence.

Even though the ‘maritime’ aspect of the Maltese economy is already recognised and capitalised upon, there is some opinion that the potential of the maritime sector is yet to be fully realised. Logistics, at one angle, is an excellent opportunity for the Maltese islands. The centralised location in the Mediterranean provides Malta the ability to provide competitive value and supply chain services^[4]. This is only increased by the technology-focus of the Maltese islands in the recent years in combination with the thriving commercial sector. This reputation presents the possibility of future developments in research and innovation in the maritime sector, one of many exciting future avenues even including diverse fields such as LNG bunkering and petro-chemical transhipment, areas where global investment has already shown interest.

The business, legal and maritime environment of the Maltese islands is comprehensive, yet oftentimes it lacks the government structure to truly take advantage of all the mentioned opportunities. In line with this prospect, the reformation of Transport Malta as announced by Minister for Transport, Infrastructure and Capital Projects Ian Borg on the 14th of October 2021 outlines a plan to separate Transport Malta into three authorities: land, aviation and maritime. This news brings promise to the industry^[5].

Further to this, the restructuring is viewed by some as essential to growth in the maritime industry, thoroughly examined in a 2020 research paper entitled ‘Realising the Potential of the Maritime Sector towards the Growth and Development of the Maltese Economy’^[2]. With such fundamental differences present in both the past and future concepts of ‘transport,’ how can a single entity be expected to handle the distinctions of every sector equally? The separation of Transport Malta between maritime, land and aviation authorities will inevitably allow more precise focus on each sector, which, for the purposes of this article, presents an interesting opportunity for a creation of a better national framework surrounding the maritime industry and the use of its resources.

In summary, the Maltese maritime economy is one where great success is already present and equally visible. The future of the sector, however, is less certain. While particular concessions, such as the Transport Malta reformation, have been introduced in an attempt to organise the industry, the necessity to band together still stands, in order to continue building upon the maritime economy to unlock its full potential.

^[1] ‘Malta – Country Commercial Guide’, December 2021 (International Trade Administration)

^[2] ‘Realising the Potential of the Maritime Sector towards the Growth and Development of the Maltese Economy’, April 2020 (Dr. Gordon Cordina, Ms. Maria Cini, Ms. Victoria Apap – E-Cubed Consultants)

^[3] ‘Transport Malta Annual Report 2020’, May 2021 (Transport Malta)

^[4] ‘Making Malta a Centre of Maritime Excellence’, 2020 (Integrated Maritime Policy)

^[5] ‘The setting up of independent authorities for the transport sectors has been announced’ – Press release by the Ministry for Transport, Infrastructure and Capital Projects, October 2021 (Department of Information, Malta)