Comments on: Just in case the doom-merchants missed this

By: Ronnie

Ronnie — Wed, 17 Dec 2008 17:36:22 +0000

Companies resident in Malta is not the same as ‘Maltese persons and Maltese companies.’ With regard to any other place with a population this small and those kinds of numbers, I would suspect that Bermuda, Belize, British Virgin Islands, Isle of Man, Netherland Antilles, Panama, Alderney etc would have similar if not better figures.

By: Mariop

Mariop — Wed, 17 Dec 2008 06:17:35 +0000

[Daphne – Another one who hasn’t read the report correctly. How do investments OUTSIDE Malta by Maltese persons and companies make Malta a good tax haven? I would say rather the opposite.]

Actually I have read it carefully – in fact the key text concerns the investments in Turkey. Simply put, foreign deposits are booked in the local entity and then transferred as investments, thereby earning interest for the local entity. Tax is paid on this interest but at a lower rate than abroad (hence the tax haven). Local depositors have nothing to do with this.

By: Peter

Peter — Wed, 17 Dec 2008 05:51:22 +0000

“Daphne – Do you know of any other place with a population this small and those kinds of numbers, leaving aside the better-performing Luxembourg and, sigh, Iceland?”

The size of the population is quite beside the point. The 10 billion euro figure is not an indicator of the attractiveness or robustness of Malta’s economy, but a simple statement of fact about the amount of money invested abroad by companies registered in the country.
Clearly, investors in larger, developed countries have their own sizable financial and industrial sectors into which they can plough their cash.
Malta has been attracting this type of revenue-driver for years, but the vicissitudes of these kinds of investments should not be inflated into a broader signifier. Actually, this is a useful area that shows how the global economy can impact Malta. In which the case, the signs are not encouraging, I fear.
As for the sums of money accrued by the local state coffers, it would be better to think of tens of millions instead of being fazed by the billions. Better than a poke in the eye with a sharp stick no doubt, but Malta is not about to turn into the Virgin Islands quite yet.

By: Peter

Peter — Wed, 17 Dec 2008 04:30:12 +0000

Daphne, an “entity resident in Malta” does not necessarily represent Maltese people and capital. Quite the contrary is most likely the case, although that information is not contained in the NSO report. Levies on the income of the companies registered in Malta contributes to the national coffers, which is what makes tax policy germane to the issue.
Again, given that the 10 or so billion euros are largely invested in low-yield government-issued bonds, the returns are brisk but hardly seismic.

[Daphne – Do you know of any other place with a population this small and those kinds of numbers, leaving aside the better-performing Luxembourg and, sigh, Iceland?]

By: Mariop

Mariop — Tue, 16 Dec 2008 20:54:41 +0000

if it includes all the banks’ investments, then it is really nohing to write about except to state that Malta is a heck of good tax haven.

[Daphne – Another one who hasn’t read the report correctly. How do investments OUTSIDE Malta by Maltese persons and companies make Malta a good tax haven? I would say rather the opposite.]

By: jon

jon — Tue, 16 Dec 2008 20:26:49 +0000

The more interesting element of this story is the 32% (or €3.2 billion) invested in Turkish bonds. After burning their fingers in Argentina it seems like the local investor continues to chase yield blindly.

By: Gerald

Gerald — Tue, 16 Dec 2008 20:21:32 +0000

So what? – maybe some of them had invested with Madoff too. What are you trying to prove? After all a decline of 709 million Euros is pretty substantial.

[Daphne – That for a minuscule population of 412,000 squatting on two pieces of rock, that’s incredible.]

By: Peter

Peter — Tue, 16 Dec 2008 16:41:16 +0000

It is not clear whether the title of the post is intended ironically, but the information contained in the NSO briefing is hardly necessary cause for merriment or otherwise. The general financial state of securities funds parked in Malta is not greatly indicative of anything except the apparent moderate attractiveness of local conditions for select investors.
While €10.6 billion may seem a large amount, the fact the money is largely sunk into government bonds and similar low-yield instruments suggests Malta is the preferred base largely for prudent institutional investors. Moreover, the breadth of investment destinations is reasonable but far from impressive.
The lacklustre performance of Turkish bonds doesn’t bode particularly well, since it accounts for a third of the volume covered. Otherwise, the rest are the usual suspects _ Jersey, Germany, the United States, Britain and Austria.
Finally, the general trend indicated by the report is a net €709.1 million _drop_ in securities held by Maltese-registered companies, mostly in the form of long-term debt securities. Not good news, but hardly catastrophic.

[Daphne – Did you read the report correctly? You don’t seem to have understood it.]