Embedding technology in our economic future

Over the past two decades, Malta has witnessed a shift in its economic and industrial landscape. This transition goes beyond economic activity, stretching out to the societal fabric as well. People are increasingly using information and communication technologies in all facets of their lives, be it at their workplace, at home and in their cars.  The use of technology has also revolutionised the way of interacting with colleagues, friends and relatives, as the use of social media, including instant message tools, has substantially increased accessibility, albeit reducing the face-to-face contact.  

At an economic level, increasingly the national output of today is based on knowledge and information. The digital economy is not only about the delivery of digital products but also about the use of digital technology as a tool to create, manage and communicate. ICT policy addresses the growth of both the digital economy and the industrial economy, but also assesses how the digital economy will transform industries and societies, improve productivity across all main economic sectors, and increase value added.  

The next production revolution will occur as a result of a number of technologies being adopted across the global value chains.  These range from a variety of digital technologies, new materials and processes.  As these technologies transform production, they will have far-reaching consequences for employment, skills, location of manufacturing plants and distribution of services.  

The rapid advancement in Malta’s knowledge-based economy has also resulted in a change in the manufacturing landscape. Although some may argue that the remaining material goods manufacturing plants currently present in Malta, will eventually re-locate to other destinations, the government should be committed to explore new avenues to increase the efficiency and effectiveness of these companies value chain management. Traditionally heavy manufacturing enterprises, including those operating in the automobile and packaging industry have been able to meet the challenges of globalisation through the management of international supply chains. As such Malta’s strategic location and the presence of state-of-the-art logistics hub, together with the ubiquitous high-speed digital networks, facilitate the transportation of industrial goods to mainland Europe and beyond.  

A central component in our economic and industrial policy effort should seek to facilitate the availability of innovative supporting business services exploring new avenues of servicing the manufacturing sector with the involvement of the indigenous micro enterprises. Government efforts should leverage on the country’s manufacturing experience to create a cluster of high value-added, high-tech manufacturing, based on automation, a highly-skilled and resilient workforce and an incentive programme to strengthen a business services cluster around existing industrial activity operating from Malta. As part of an extensive financial policy framework a new PN government will reduce the income tax to 10% for self-employed and small businesses in their first €50,000 of profits. Seeking to recognise and incentivise further the reinvestment in local companies, we will also reduce to 15% tax on profits which are re-invested in the business.

This rapid technological change challenges the adequacy of skills and training progammes.  New production technologies augment the importance of interdisciplinary education and research, necessitating collaboration between industry and education and training institutions.  Life-long learning programmes are an imperative so that skills upgrading matches the pace of technological change.  Generic skills – such as literacy, numeracy and problem-solving – should be an integral part of adult education and training programmes since these are the basis for learning fast-changing specific skills.  

Considering the high contribution of digital technologies in our economic landscape the percentage of RTDI investment is relatively low.  Paramount to creating an environment conducive to increase such investment is the need to attract the right human capital, including intellectual property experts, international financiers specialising in innovative funding programmes, trainers and mentors. Mobility is key in our RTDI efforts, and as an EU member we need to leverage on the existing research and innovation networks and programmes in order to attract leading researchers and innovators since scientific knowledge and approaches to the conduct of research often reside with individuals as tacit knowledge. 

Research, technology development and innovation (RTDI) investment requires a targeted special effort by both the private and the public sector.  Innovation carries a degree of risk since it often necessitates threading in unknown territories and a high degree of research.  It is for this reason that a new PN government will tangibly incentivise such efforts with financial instruments including the exemption from tax of innovative businesses for its first few years of operation. A new PN government will also make available €360 million as guarantees for loans to start-ups, greatly facilitating access to finance to local indigenous micro businesses, including those engaged in RTDI activities. These efforts will aim to ease the transition of innovative activities into commercialisation.

The successful realisation of the country’s economic vision is dependent on the resilience of the nation to accept the accelerated adoption of digital technologies. While developing the talent of our population is an underlying priority of the country’s economic policy, an innovation strategy facilitating the development of new business clusters and fostering innovative entrepreneurship are other pillars in our effort to leverage the economic gains of a digital revolution for a better quality of life for all. 

Claudio Grech is a Nationalist MP and a candidate on the first district