Dream it, wish it, do it | PKF Malta

Our established pillars of the economy are peaking and having reached a plateau level there are early signs that diversification is recommended

One hopes that the budget speech reveals new initiatives – that is Logistics Malta and Innovation Malta. In my opinion, both are expedient if we are to catch up and coordinate our ecosystem where it concerns spatial planning, logistics, oil and gas storage, followed by research in engineering, Life Sciences, medical care and upgrading our knowledge in Blockchain, and last though not least Artificial Intelligence.

We are regularly reminded how Western countries have invested millions to build up centres of innovation yet as an island the concept so far has been a Cinderella. All along, we continue to invest heavily to buttress the tourism industry including a national airline and by subsidising low-cost airlines in their commendable efforts to attract tourists from new markets.

There is also a robust property construction lobby which is investing heavily in upmarket developments definably out of reach from first-time buyers – a single bedroom apartment will set you off by a six-digit figure. There is nothing wrong in the State supporting these sectors but one needs to keep the right balance. The market for luxury apartments calls for a steady flow of buyers (mostly foreign) which are attracted to the island. Just take note of the thousands applying for residence under the passport by investment scheme.

Surely this is a finite number. Again, expansion of tourism particularly of the lower end places a heavy strain on the infrastructure and inevitably adds to a densely populated country with a footprint of just 320 square kilometers.

Readers may ask,“Why seek change given that the economy is running at such a good rhythm + why look a gift horse in the mouth?” The answer is that our established pillars of the economy are peaking and having reached a plateau level there are early signs that diversification is recommended.

This poses an onerous burden on our political leaders. It is true, one cannot be complacent yet it is not all doom and gloom, considering how since independence 54 years ago, we made steady progress to shed off an image of a fortress economy.

Remember 2009 was a recession year yet we recovered since then, enjoying almost full employment. Still we cannot afford to rest on our laurels. The answer is – we need to lift our heads above the parapet and seek pastures green. Simply put we need to seriously explore how to diversify our economy.

There is nothing more befitting to inculcate change than if we turn our sights to attract talent to our shores to build a thriving logistics and innovation Malta. But many dream about this concept, wish it but in the end never succeed to do it. The Times of Malta this week commented favourably on a study prepared by Researcher Vangelis Tsiligiris which found that the island ranked very favourably on a number of education indices such as student mobility; unique education programmes as well international research. It also found Malta’s widespread use of English, good quality of human income and high quality IT services made it a good contender to attract foreign universities.

The report suggests that the government should focus on attracting high-value universities which can offer post-graduate programmes, such as Masters and PhDs in sectors relevant to the Maltese economy.

A textbook solution will consist of creating an ecosystem to nurture start-ups and help them with venture capital to research and develop their creativity. With this in mind, this year PKF had the pleasure and privilege to visit the CIC Thought Leadership centre in Rotterdam, The Netherlands. The Centre in Rotterdam is expected to house about 550 innovative companies and is built to synergise with an international community of entrepreneurs, investors, and established businesses.

Cambridge Innovation Centre (CIC) is based in Boston, US and has recently expanded to Europe starting with Rotterdam. Like Malta, the Dutch are fluent in English and Rotterdam prides itself to be a melting pot of different cultures. PKF thinks that its efforts to attract a world class organisation in his field do not come a moment too soon.

Alas, the objective of having an innovation and business accelerator centre of caliber will prove to be a true catalyst to anchor existing manufacturing community and attract new ones.

This roadmap is an ambitious one and needs proper Government support possibly out of an innovation fund which we promised EU Commission to build reaching 2% of GDP. Which brings us as to the topic why PKF is keen to put its shoulder to the wheel and attract investment in this regard.

Three years ago, it pioneered a familiarisation trip to Massachusetts Institute of Technology (MIT) in Boston, USA to explore links to promote Malta as a potential business accelerator and/or Life Sciences hub for innovators, inventors and entrepreneurs.

It is interesting to note that the Massachusetts Institute of Technology (MIT) is a private research university in Cambridge, Massachusetts founded in 1861 - built in response to the increasing industrialization of the United States. While on the subject of innovation and start-ups one reads in latest edition of The Economist how US creativity has prospered particularly in Silicon Valley.

From 2010 to this year venture capitalists invested $168bn in firms in the Silicon Valley (Bay Area). It appears that Silicon Valley is still a place where new ideas can flourish, fortunes can be made and products that change millions of lives will get dreamed up and brought to market.

Malta is perhaps too small to try to catch up with giants like Silicon Valley which since the 1980s, has been the home to three of the world’s five most valuable companies: Apple, Alphabet (Google’s parent) and Facebook, valued between them at almost $2.5 trillion. The Valley hosts 57 unicorns – private start-ups valued at more than $1bn – including household names like Airbnb and Uber. The sins of its success are many but the top one is that it has become too expensive for average start-ups to thrive.

The report states that there is a gentle migration of start-ups seeking other hubs in USA, some going to Europe and China. Post Brexit, Malta can be vigilant and try to attract some of these companies if it first manages to have its own research hub supported by local universities and technical colleges.

Another reason accounting for this migration outwards to Europe is because technology has facilitated many Silicon companies to reduce their costs by keeping a skeleton staff and the rest migrate to cheaper venues while still keeping in touch using messaging, video-conferencing and collaborating online.

In conclusion, back to Malta our forefathers have always been vigilant to earn their daily bread and in the process have mastered many skills to survive over the centuries. It is up to us to dream about it, wish it and fashion our own destiny towards an improved lifestyle.