SPEECH BY THE HON. JOSEF BONNICI, MINISTER FOR ECONOMIC SERVICES, AT THE OFFICIAL INAUGURATION OF MALTA MOULDS LTD., AT HAL FAR INDUSTRIAL ESTATE

It is a pleasure and an honour for me to officially inaugurate this new industrial operation which is a quality addition to the more than 50 companies of Italian origin that are presently ustilising Malta as part of their international or regional strategy producing a variety of goods for export.

Malta Moulds Ltd. specialises in high quality moulds for industrial use, and can be classified as a manufacturing concern with a high value added component, which is the type of activity which we are so keen to attract to Malta.

I am informed that the company has been attracted to locate its operation in Malta due to Malta's proximity to the European mainland; competitive production costs; the availability of a motivated work force that is eager to learn and that responds fast to new ideas and concepts; availability of factory space at very reasonable rates, attractive incentives for investment and the general understanding of the Italian language, amongst others.

Following the company's positive initial experience in Malta, it has already moved on to a second operational phase and it has even patented its own, internally developed, specialised deep hole drilling machine for industrial use. These machines, which I am told, are a world leader in the sector, in terms of quality and cost containment, are now being built in Malta, with an initial order for 20 units in this first year of production..

The company is planning to expand further in order to be able to penetrate new markets even outside Europe. I am sure that your plans will be stimulated further and greatly assisted by the new Business Promotion Act, recently enacted by Parliament, and by the new incentive package which will soon become available both to existing and prospective investors.

The new incentive package, which will shortly be published in the form of a legal notice, will certainly serve as a boost to existing and new investment, primarily in the manufacturing sector which employs over 30,000 people and which, together with tourism and the services sector, constitutes one of the pillars of Malta's economy . We want to sustain our manufacturing sector and encourage it to develop. The strategy is to promote growth in activities that maximise value added.

The incentives we shall now be offering do not depend any more on whether one exports or not. They are meant to promote productivity growth regardless of where the product is sold. We are not only offering new tax incentives, with reduced rates of corporate tax which start from five per cent and move up to 15 per cent over a 15-year period, but also investment tax credits, a value added incentive scheme, special provisions for small businesses, and other incentives related to training and job creation. These incentives will not only be available to prospective investors, but also to existing ones, thus ensuring that existing companies, already benefiting from incentives under the old Industrial Development Act, can retain and increase their investment in Malta.

We believe that Malta is a good investment location, despite the strong competition which now exists especially from Central and Eastern European countries that are taking full advantage of their prospective EU membership.

It is satisfying to note what a leading German bank stated recently, that foreign investment per capita in Malta is still the highest amongst the countries that are seeking membership in the European Union. May I add that interest from foreign, as well as local, investors is very encouraging. Last year, the Malta Development Corporation approved no fewer than 59 new projects and expansions of existing enterprises, with a projected capital investment of Lm20.6 million. Employment in new projects are anticipated to exceed 1,600 within three years. In addition, total investment in the manufacturing sector has gone up from Lm23.4 million in 1998 to Lm74.7 million last year. The sector has also registered an increase in employment of 600 in the same period, while exports by the sector shot up by almost Lm265 million in one year.

May I also touch about the consistent interest in Malta shown by Italian investors since we have started the drive to industrialise more than 30 years ago. As I have already said, there are now more than 50 companies of Italian origin operating in Malta, employing over 3,500 people. Throughout the past year no fewer then seven new projects originating from Italy have been approved. This makes Italian investment, together with German investment, as the most important source of new direct foreign investment in Malta.

It may be true that the vast majority of Italian companies investing in Malta originate from the regions of Lombardia and Piemonte, although during the past few years we have seen a growth in interest from other parts of Italy which has led to an inflow of investments from Tuscany and Central Italy.

Like other investors from other parts of the world, Italian investors have recognised Malta's potential and its advantages. For the Italian investors, Malta offers an added bonus – a cultural and social link, and language communication and proximity.

We are striving very hard to attract more foreign investment to our shores, in particular in those sectors where Malta offers a distinct competitive advantage, such as information technology, software development, electronics, pharmaceuticals and medical related products and precision mechanical engineering.

Occasions, such as today's inauguration of Malta Moulds Ltd, provide us with additional encouragement to intensify our endeavour.

In conclusion, I wish you success in this venture.