31 December 2003

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FDI flows increase 90 per cent since 1994

- Malta’s transnationals, Malta-based foreign affiliates ranked

By David Lindsay
Inward and outward Foreign Direct Investment (FDI) to and from Malta has increased by 90 per cent between 1994 and 2002, the United Nations Conference on Trade and Development (UNCTAD) has reported.
According to the report, both inward and outward FDI stock have been increasing consistently since 1994, by a respective 86 and 90 per cent. However, the highly sought after FDI pound has been declining since 1999, when FDI inflows had reached a record level of Lm328 million.
UNCTAD cites capital withdrawals in the banking industry last year as leading to a net disinvestment for last year.
The decline is also reflected in the falling ratio of FDI flows to gross fixed capital formation, which show a downward trend for the past three years.
The crucial contribution FDI makes to the Maltese economy is evidenced in the fact that the ratio of inward FDI stock to GDP rose to almost 70 per cent in 2000 and 2001. The relatively low level of the same ratio on outward FDI stock, of about seven per cent in 2001, leads UNCTAD to suggest potential for further outward FDI.
On the other hand, FDI outflows from Malta were likewise negative as they have been since 1995, when data first began to be compiled.
The report also highlighted the fact that the largest Maltese Transnational Corporations (TNCs) are involved in services activities such as transport, hotels, trade and finance and the report notes with interest that these Maltese TNCs’ foreign affiliates are predominantly located in the EU accession countries, with some foreign affiliates in Austria, Germany and the United Kingdom.
The report lists Air Malta as the country’s largest TNC in 2002 with sales of USD295.1 million and 1,753 employees. In the finance and insurance category, First International Merchant Bank is placed in an overall second position with sales (or income on investment) of USD120.1 million and 70 employees.
The Corinthia Group comes in third with sales of USD73.2 million and 1,648 employees, followed by Bortex Clothing Industries with sales of USD29.2 million and 350 employees and NM Arrigo with sales of Lm2.6 million and 18 employees.
Meanwhile, the largest affiliates of foreign TNCs located in Malta are derived from the EU - mainly in services activities such as trade, telecommunications, finance and electrical and electronic equipment.
HSBC Malta leads the pack in this respect, with sales (or income on investment) of over USD3.9 billion and 1,605 employees. Next is STMicroelectronics with sales of over USD1.5 billion and 1,926 employees, which is followed closely by the low-key Dutch Tamoil Trading with its sales of over USD1.3 billion and just three employees.
Turkish bank Disbank is next with sales (or income on investment) of USD530.9 million, followed closely by Swiss trading company, La Nouvelle, which saw sales of USD495.2 million. Other foreign affiliates located in Malta include Fitzwright Europe, with sales of USD180.9 million, Dowty Automotive with sales of USD50.9 million and Vodafone Malta with sales of USD27.7 million.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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