Top Innovation conference addressed by Silvio Schembri

Committed young researchers in Malta are hampered by a lack of finance. And it is no secret that venture capital in Malta never flourished

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George M. Mangion
7 July 2017, 8:00am
Parliamentary Secretary for Financial Services, Silvio Schembri
Parliamentary Secretary for Financial Services, Silvio Schembri
A hall packed with young innovators, scientists, lecturers and representatives from US-based entrepreneurs were greeted by Silvio Schembri, parliamentary secretary at the Prime Minister’s office, when he gave a speech extolling the virtues of a healthy economy which is firing on all cylinders and which due to merits of the Labour party has succeeded to receive kudos from all international rating agencies.

The conference, held at Microsoft Innovation Centre, was organised by PKF as part of its CSR in collaboration with Life Sciences Malta, with the participation of representatives of FinanceMalta and MaltaEnterprise.

Can Malta act in a complacent way regarding innovation? Undoubtedly this aspect cannot be ignored for much longer when realising that it retained 26th position in The Global Innovation Index 2017 out of 100. It was no surprise that it was preceded by Luxembourg, Switzerland, China, the Netherlands, Iceland, Ireland and Germany.

Innovation intended to make people’s lives better is potentially spun in science labs by committed young researchers who in our case are hampered due to lack of financial backing for their end product. It is an open secret that venture capital in Malta never flourished.

Even for PKF to secure sponsorship to host the international event it was greeted with smiles but no backing from both private and public sectors. The good news is that the prime minister’s top three tasks now include innovation. All this may change the government’s mindset since we obviously cannot expect blue chip FDI to pour in unless stakeholders succeed to build up an adequate ecosystem (which is lacking) to support research and innovation.

Regardless of the pitfalls, PKF succeeded to attract a formidable line-up of speakers, including Dr Jeffrey Pullicino Orlando, chairman of MCST, Stas Gayshan and Gor Sargsyan to give a keynote speech based on their experience in Boston, and Silicon Valley US.

This was followed by comments from a panel composed of Dr Leonard Bonello, an expert from Ganado Advocates, Joe Woods, a qualified IT entrepreneur in CreoLabs, and Ing Joseph Sammut who masterminded the formation of the first modern Life Sciences Park.

Other panel speakers included Matthew Caruana from Zaar Crowd funding, Johan Zammit from Netrefer and Patrick and Beata Young discussing female participation in the workforce.  The panel was moderated by Dr Marilyn Mifsud from PKF.

The keynote speech by Stas Gayshan included a number of salient points relating to the roadmap that Malta needs to plan in order to improve its success in attracting new FDI while realising that existing pillars of the economy may succumb to external forces in the short to medium term.

He pointed out that the essential ingredients to success include an efficacious physical and social infrastructure together with that magical network that bonds the nodes which in Silicon Valley jargon is referred to as the ecosystem. Many of the innovations we have experienced in our lifetime have displaced millions of workers in the EU and the western economies. It begs the question – are we planning for the eventual change in job opportunities caused by the displacement of workers once innovation technology such as distributed ledgers (blockchain and Fintech) invades our shores.

Stas Gayshan asked, is Malta making the right choices?  One may be coy and reply that government agencies geared to attract new business are all in place. Others tell you that since Independence the State continues to invest millions for free education and monthly stipends up to tertiary level. In reality, our education system needs tuning as it churns a disproportionately high number of early school leavers and very few scientists while the participation rate of females at the workplace is at a low rate compared to the EU average (although an improvement has been registered).

Joe Woods asked if we were educating our students to fit into stereotypes who study by rote and aim for school leaving certificates but are not innovative or lack a sense of entrepreneurial passion. Reality hits a discordant note with a dearth of innovation and R&D centres in the private sector, where graduates can indulge in applied (fully VC funded) research rather than opting to migrate – hence the brain drain.

But readers may ask what is wrong with our existing modalities?  The answer is there is no magic formula how to succeed and no silver bullet yet. The stark truth is we are at a crossroads. The friable condition of our financial services industry, tangled with the burgeoning Igaming sector is dependent on preservation of the tax structure – currently under siege in Brussels.

Moving on Ing Sammut recounted nostalgically how VF (a large textile factory operating at San Gwann, manufacturing top quality Wrangler jeans) abruptly shut its operations in the late seventies, leaving in its wake no trained R&D staff. It simply migrated to another location offering comparatively lower wages. All remaining textile firms have since closed down.

It is no consolation that replacement of the textile sector was quickly followed by attracting pharmaceuticals producing generic medical products – again with little or no R&D. The writing is on the wall – we must learn the lesson resulting from the weakness of past industrialisation policy following the unexpected exodus of all textile factories. With hindsight critics tell us they would not have lifted anchor had they been encouraged to invest in R&D.

Another keynote speaker was Gor Sargsyan, president of Qbitlogic International, Atlanta (USA). This is a US-based company managed by Gor who is currently based in Palo Alto, California, which is the forerunner of Silicon Valley innovation feats.  Alas fulfilling the dream of having a research and business accelerator in Malta matching that of Silicon Valley will prove to be a true catalyst to anchor the existing manufacturing community and to attract new ones.

This dream is an ambitious one as governments in Europe are in competition to attract blue-chip companies and start-ups particularly in biosciences, fintech and blockchain technologies.

Which brings us to a central aspect of this article. It recounts a pro bono trip last year headed by a delegation from PKF which visited Massachusetts Institute of Technology (MIT) in Boston, USA to explore links to promote Malta as a potential business accelerator and/or Life Sciences hub. Another interesting landmark is the Boston-based Cambridge Innovation Center (CIC) managed by Stas Gayshan.

This houses more than 1,000 companies in close to 50,000 square metres of premium office and co-working space across eight facilities, including its expansion in St Louis, Missouri, Miami, Rotterdam, Warsaw and Sydney. Additionally, Android co-founder Rich Miner built his unique Google Android software at CIC where one finds a non-profit organization styled the Venture Cafe Foundation (this provides a forum for venture capitalists to scout and help fund new talent).

To conclude, the motto – do not try to fail but do not fail to try – is lacking among our upcoming millennials yet the government must not ignore the warning on the wall that the fragile state of industrial partners may ultimately face a new wave of disruptive technology. 

George M. Mangion

George Mangion is a senior partner of PKF, an audit and consultancy firm. He may be contacted at [email protected] or on +356 21493041.

george_mangion
George Mangion is a partner in PKF, an audit and business advisory firm