Manifacturing

Economic activity in Malta is characterised by a prevalence of small enterprises with micro enterprises constituting approximately 94 per cent of the total number of firms (2004), operating prevalently in the manufacturing and tourism sectors. Overall, the fragmented composition of Malta’s industrial landscape, the economic openness, insularity and high export concentration of goods and services, underpins the vulnerability of the Maltese economy.

Malta’s manufacturing enterprise base predominantly consists of locally-owned small and medium-sized enterprises (SMEs) operating alongside a small number of relatively large foreign-owned export-oriented subsidiaries of multinational companies. In recent years, this industry has faced the need to restructure in order to better compete at international levels. This need was underpinned on the one hand by the prospect of the dismantling of protective measures as well as by the need to better face the challenges from developments in the international markets, in particular with intensified competition from the emerging countries. International competition will remain a key concern and 7 This has been particularly evident in the textiles sector. Further investments in support infrastructures are required to assist enterprises in dealing with such challenges.  

Manufacturing industry in Malta has been changing with the emphasis shifting from the traditional low cost manufacturing towards higher value added activities. Cases in point are the contraction of the textile sub-sector and the emergence of generics manufacturing activities in the pharmaceutical sub-sector, in which operators’ competitive advantage lies in value added.  

Aggregate nominal output from manufacturing activity has decreased by approximately 21 per cent from Lm1,315 million in 2000 to Lm1,037 million in 2005. However, the decline registered in 2005 is mainly attributable to the difficult and subdued environment of the semi-conductor international business, which constitutes a large share in total manufacturing, and offset positive results registered in other sub-sectors. The sector’s gross value added decreased from Lm345 million in 2000 to Lm300 million in 2001, increasing subsequently in 2002 and 2003, but contracted gain to Lm282 million during 2004. During 2005, gross value added in the manufacturing industry increased marginally by 0.9 per cent to Lm285 million.

In line with these developments, manufacturing employment followed a downward trend over the past years. Manufacturing employment declined from 25,126 at the end of October 2004 to 24,605 at the end of October 2005. Job losses were mainly concentrated in the manufacturing of textiles and textile product and manufacturing of transport equipment.

The construction industry has always been considered one of the significant drivers of Maltese economic activity, as it represents a high degree of local value added with a significant multiplier factor. National infrastructure programmes have provided a considerable impetus to the sector in recent years, namely the new hospital project as well as a number of infrastructural projects financed by the Fifth Italian Financial Protocol and EU Cohesion Policy 2004-2006. Over the last five years, the share of gross value added of the construction industry expressed as a percentage of total value added was 4.5 per cent. Output by the construction industry followed an upward trend from Lm108.6 million in 2000 to Lm144.0 million in 2005. Output by this industry registered an average annual growth rate of 5.8 per cent over the 2000-2005 period. The upward trend in output by the construction industry was reflected in positive growth rates in gross value added during the 2000-2005 period registering an annual average growth rate of 5.7 per cent.

 

legals | credits | F.A.Q.