A goal-oriented minister of a pro-business government, it is no wonder that Silvio Schembri is considered one of the most influential blockchain leaders in the world. Serving as Malta’s Minister for the Economy, Investment, and Small Business, he is spearheading an ecosystem aimed at establishing Malta’s rising dominance in financial services and tech-related industries.
In what direction is the Ministry for the Economy, Investment, and Small Business leading Malta’s development?
The Ministry’s portfolio covers financial services and digital economy, and innovation embedded in both. The Maltese economy is based on services, and financial services and digital economy represent a substantial part of our economic growth. Financial services alone employ more than 10.000 people. Nowadays, the sector is highly competitive, and although we keep on investing in traditional financial services, we are also focusing on innovative niches, such as Fintech. We are continuously looking into diversifying them in order to “future proof” them, i.e. make them more resilient to economic shocks.
What are the pillars of the innovative ecosystem that you’re creating and developing?
As a country with limited natural resources, we need to strengthen our competitive advantages, which are labor and flexibility. We have identified digital economy as an ideal area where we can grow because growing this part of the industry doesn’t require huge amount of land or resources. It requires flexibility, openness for business and innovation, especially when it comes to legislation, and these are three things that Malta offers as a country. We are small and nimble, which makes us highly efficient when it comes to legislation.
How did Malta became known as the international centre for gaming?
The gaming industry has been there for centuries, but the industry remained unregulated. Companies would operate in any country without the need to have a license, since there was no jurisdiction that offered a regulatory base for the sector. Aware of the absence in regulation, Malta decided to create a robust regulatory environment where gaming companies could, after passing a robust test, gain a license that would enable them to offer their services anywhere in Europe. Succeeding to create a regulatory framework which is not suffocating and offers certainty to the industry is was the right move that basically brought all the these companies to Malta.
Malta is renowned as the blockchain island. How did Malta earn this reputation?
Basically we emulated what we did previously with the gaming industry. The blockchain industry, and more specifically the cryptocurrency area of the blockchain industry, operated in a vacuum with no regulation and lack of consumer protection. Analyzing what was missing, Malta became the first country in the world to create a holistic framework for the blockchain industry. This regulation is highly adaptable to other fields, such as artificial intelligence.
Results so far have been very encouraging. A significant number of companies have shown interest, and hopefully in the next few months we will see the first companies receiving their license and start operating, making a distinction between the serious companies and others, thus putting the industry into a more structured environment.
Have you witnessed an increase in FDI following Brexit?
The UK is our ally; we have always maintained strong relations and we intend to continue to do so. In this regard, unlike other countries which approached companies with reallocation offers following Brexit, Malta took a different approach. Our approach suggests co-location instead of reallocation, inviting companies to divide their operations between Malta and the UK, that way still maintaining their UK operations, while having a foothold in the EU. Enabling long-lasting stability, this has proved to be an good strategy which captured the attention of numerous investors, who are now reaching out to us directly. Its a win-win situation both for Malta and for the UK.
Why should investors, especially investors from the Gulf region, consider Malta as an investment destination?
Malta has substantive competitive advantages, but different regions find different incentives appealing. For the countries of the Gulf, Malta’s appeal lies in its geostrategic location, being part of the EU, in the heart of the Mediterranean, and close to the MENA region and North Africa. Malta can serve as investors’ gateway base for Europe or for Africa; we are trusted by both continents. Our country has perhaps the easiest common understanding with the Gulf countries compared to all EU countries, for historical and cultural reasons.
Furthermore, our competitive advantages include our sophisticated ecosystem, which is paired with a very attractive tax regime, a large number of bilateral agreements, a well educated English speaking human capital, political stability, public safety, excellent connectivity, etc.
Malta’s unique advantage also lies in the fact that our infrastructure can be compared to that of another metropolitan city. We are a small, densely populated island, which makes our country an excellent destination for product testing. Companies can test their products basically in a controlled environment with a relatively small investment, as was the case with 5 G network – Malta was among the first countries in the world to offer this service.
What are your expectations from Malta’s upcoming participation at the World Expo 2020 Dubai?
Malta and the UAE traditionally enjoy excellent bilateral relations. The World Expo 2020 Dubai is a huge opportunity to showcase what Malta has to offer as a country. Our vision is to promote Malta as a powerhouse of economic innovation, as a gateway to Europe and an excellent investment destination.