Can we match Singapore’s economic miracle

Quoting The Economist, in its recent edition, talks about the stellar success of Singapore. One notes how (like Malta) it gained its independence almost 60 years ago.  Malta made some considerable social and economic progress yet Singapore has raced ahead and became a beacon of prosperity. At the moment of its independence, Singapore was poorer on the same basis than South Africa or Jordan, yet it worked consistently on its unique formula to become a leader in Asia. While comparisons can be odious, one admires how Malta changed its fortress economy to reach a respectable GDP per capita. 

Due to various factors, Malta’s ranking in the Global Innovation Index (GII) may not be as high as some other countries. The GII is a comprehensive metric that evaluates multiple aspects of innovation, including institutions, human capital and research, infrastructure, market and banking sophistication, knowledge and technology outputs, and creative exports. It's important to note that we can learn from Singapore's example, yet any policies or reforms should be tailored to fit Malta's unique context.  

The roadmap would need to consider local cultural values, economic goals, and social structures to develop an education system that supports the country's long-term development and aligns with its vision for the future.  After exceptional growth in 2022 (8.1%), real GDP growth is estimated to have remained strong at 6.1% in 2023.  In 2024, Malta‘s growth is revised up to 4.6%. It is set to be driven by net exports and private consumption, which should continue to grow strongly, even if at lower rates than in the previous two years. Investment growth is expected to pick-up after the Pandemic slowdown and public consumption is set to remain strong.

 Growth in 2025 is forecast at 4.3%, with the growth rate of consumption, investment and net exports stabilising at slightly lower levels in comparison to 2024.  To address national debt levels and improve GDP, Malta would need to implement a multi-faceted economic strategy focused on sustainable growth, fiscal responsibility and strategic investment.  While it may be challenging for Malta to reach Singapore‘s high GDP, one may mention differences in population size, economic structure, resources and geographical location. Economists have been telling us that we need to consider new strategic steps. 

The most obvious step is to reduce the budget deficit, improve fiscal probity and control public spending. This might include reforming public sector operations, improving tax collection efficiency, and reducing unnecessary expenditures.  The next ingredient which sounds so obvious but so hard to introduce higher economic diversification. These priorities have averted Malta Enterprise but can still be revisited by focusing on better tech education and vocational training to improve the skill level of the workforce. In this context, PKF in Malta has, for the past seven years, been discussing with Malta Enterprise how to attract American investment in the running of a professional business accelerator hub.  So far, talks have dragged on, and most probably, the mood for such investment is not high in the pecking order.  As can be expected, such inward investment will find friendly faces and drop anchor in other European cities. Over the years, a root and branch-reform can attract higher-value industries and drive economic growth.  

Malta is a laggard in R&D and Innovation, with a misery budget of just 0.6% of GDP in research (Europe‘s average is 3%).  It's important to note that while Malta can learn from Singapore's example, any policies or reforms should be tailored to fit Malta's unique context.  The Maltese government would need to consider local cultural values, economic goals and banking structures to eventually develop an elite education system that supports the country's long-term development.  Encouraging less runaway construction and building of luxury hotel towers and instead focusing more on innovation can lead to the creation of high-value products and services. Malta could offer tax incentives for R&D activities and strengthen collaborations between academia and industry. 

No solid effort is made to tap the green sector and attract international players in large scale offshore renewables within EEZ.  Regrettably, the motto of “export or die” never featured in the national chorus.  We tend to rejoice with a burgeoning low-value tourism and a volatile film industry (the average per capita daily spend of inward tourists is a mere €132). More Identita licensed agents now recruit thousands of low-wage TCNs to fill vacancies with a view to lowering the cost of operations.  Observe how, with a semi-dormant Stock Exchange, only lip service has been paid so far to inculcate strong partnerships between academia and industry and thus list more PIEs. More listed entities and private equity firms are essential for growth.  If Malta has more linkages between universities and businesses, this could boost the commercialization of research and development.  

Ideally, schools encourage students to excel in STEM subjects.  In summary, Malta and Singapore are two very different countries with distinct historical, cultural, and economic contexts, which naturally lead to differences in their educational systems and commercial outcomes. However, Malta can certainly take inspiration from Singapore's success and adapt some of its strategies to improve its own modest GDP per capita. 

Looking inside the recipe for success shows Singapore has consistently raced ahead by upping the quality of its human resources.  It consistently placed a strong emphasis on teacher quality. Likewise, Malta could focus on attracting, training, and retaining high-quality educators by offering competitive salaries, professional development opportunities, and career advancement pathways. Can Malta achieve its economic Renaissance by becoming the flourishing Singapore in the Med?