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The challenge in the years ahead will be to build on that position, by continuing to adapt and innovate and attract more international investment in the information and communications technology (ICT) sector.
A number of factors suggest Malta has the potential to succeed, not least the rapid progress the country has made in developing its IT infrastructure in recent years, particularly since it joined the European Union in 2004.
“There used to be just one operator per sector,” recalls Philip Micallef, chairman of the Malta Communications Authority. “We now have five operators in the mobile sector, including two virtual operators. The number of fixed-line operators has grown from two to three while broadband has also grown.”
The growth of the IT sector is due to a combination of well-targeted government initiatives and flexible regulation – things which are arguably easier for a small country like Malta to achieve than for larger economies. But there is the potential for the country to do far more, according to local industry executives.
“I think we want Malta to be an ICT hub, to make it attractive so that organisations relocate to Malta,” says Ivan Bartolo, CEO of 6PM, one of the leading ICT companies on the island, providing
IT services and solutions and business intelligence expertise. “But people will only relocate if they have a business case. We need to become smarter in the way we do things, because there are [other] countries that are coming up fast.”
One area where things are already improving is in terms of the infrastructure available to technology businesses on the island, not least with the ongoing development of the SmartCity Malta business park.
The project involves a $300m investment by Dubai-based Tecom Investments and is the largest foreign direct investment in Malta’s history. A number of major international IT companies including Cisco and Hewlett-Packard are already based on the site, and work is ongoing to expand the facilities (see over).
The park is focused on attracting a wide range of international media, telecoms and IT companies looking for a base inside the EU.
“We are in discussions with many companies,” says Fareed Abdulrahman, CEO of SmartCity Malta. “For our business parks in Dubai we target five industries: ICT, media, healthcare, education and logistics. It’s all knowledgebased companies, so anything that comes under that is a possibility for Malta too.”
Among its recent marketing efforts, Smart- City last year launched an initiative to bring Chinese and South Korean e-gaming companies to Malta. The e-gaming sector has been a critical element of Malta’s success in the ICT industry and the country is already the largest e-gaming jurisdiction in Europe.
According to Reuben Portanier, chief executive officer of the Lotteries & Gaming Authority, there are 290 gaming operators on the island, holding 400 licences between them.
They collectively employ more than 3,000 people directly and a further 3,000 indirectly.
There have been concerns that some egaming companies may move their operations to rival jurisdictions, in the wake of Malta lifting its VAT exemption for e-gaming firms on 1 August this year. However, the depth of expertise that has been built up on the island, alongside some other key benefits, means the country should be able to maintain a strong market position.
“We are an EU member state and that has its own attractions,” says Portanier. “The euro has created another influx of interest as we’ve completely eliminated the exchange rate risks.
Malta has also developed an unrivalled ecosystem of service providers that are experts in gaming. There are law firms here that know EU gaming law inside out, and it’s the same with the telecom operators and the banks – they know exactly what the needs of the gaming industry are.”
One of those lawyers is Andrew Zammit, managing partner of Zammit & Associates, He acknowledges the challenges the industry faces, but says there are strengths too.
“We’ve spoken to our larger clients. They see a role in continuing to be in Malta because there is an expertise and understanding of the industry that has developed here. They’re finding good, dedicated people for salaries that would be less than in other jurisdictions, so they feel there is still a value to being here. How long that will last is anyone’s guess. I think five years is the longest timeframe you can think in business terms.”
Even if growth in the e-gaming industry does begin to slow, other areas could take up the slack according to Alan Camilleri, chairman of Malta Enterprise.
“If we look at the ICT industry we believe we are already quite solid, but we believe the way forward is going into digital entertainment as a subset of ICT, such as games development,” he says. “We’re working very hard on that. That’s where we want to take the economy.” In all of this a critical element is ensuring the country’s skills base is constantly refreshed. Businesses will only come to the island if there is a reliable supply of expertise.
In that regard, the government’s efforts to incorporate IT across the school curriculum are critical, providing a steady stream of potential recruits to the sector.
Today pupils use the internet throughout their school career and the government has also been keen to teach IT skills to those that often get overlooked, such as the poor and the elderly.
In the process it hopes to close the ‘digital divide’ and ensure people don’t get left behind as more services and jobs rely on online access.
“We run a lot of what we call social IT,” says Austin Gatt, Minister of Infrastructure, Transport & Communications.
“There is still a digital divide and there are people who find it difficult to buy a computer or have internet access, so we run programmes to address this.”
Among the initiatives are the establishing of computer learning centres and schemes whereby the government replaces old ICT equipment. Help is also offered to people wanting to move into IT from careers in other sectors.
“We provide incentives to individuals who want to undertake specific courses. If a teacher wants to go into a career in the ICT industry, they would get 80% tax credits for their course fees,” explains Camilleri.
The government’s policy seems to be impressing the key audience of international executives.
“What I admire is how they encourage fresh graduates to learn IT and be involved in IT and how they incentivise the students,” says Abdulrahman.
It is this human capital which is Malta’s greatest potential asset within the ICT sector – something which can be seen in the hundreds of students that are enrolled on courses at the Malta College of Arts, Science & Technology. In June this year, final year students exhibited some of the innovations they have been working on to IT executives, ranging from website applications for managing multimedia content to client subscription software and network infrastructure technology to give businesses faster data transmission.
It is such home-grown innovation which should help Malta’s IT industry succeed in the future, in tandem with international companies.
“ICT shouldn’t just be ICT for ICT’s sake,” says Micallef. “It also needs to be sustainable and help make the country more competitive.” |
