MALTA’S DIGITAL ECONOMY

Hon. Clayton Bartolo, Parliamentary Secretary for Financial Services and Digital Economy

Giselle Borg Olivier interviews Hon. Clayton Bartolo, Parliamentary Secretary for Financial Services and Digital Economy about the current state of affairs in Malta when it comes to the economy, human resources, the tech sphere – and what has been done in the midst of the pandemic.

It is no secret that the financial services are a strong pillar within the Maltese economy and adding to this new technology is being added to the mix. Is this sustainable, and are the financial services still relevant for the jurisdiction?

The financial services industry has, over the years, played a significant role in driving and sustaining Malta’s buoyant economic sector. As a Government, we are committed to further strengthening and consolidating this sector, which is regarded as a key pillar of the Maltese economy. In terms of sustainability, given the unprecedented times that we face, I have stressed on the importance of achieving and pursuing economic diversification to ensure a more sustainable and resilient economy and be in a better position to mitigate risk. This economic vision can be materialised through ongoing work that is dedicated to further strengthening Malta’s drive as a Centre of Excellence while laying the groundwork for new niche economic sectors to relocate their operations locally and further boost our Foreign Direct Investment (FDI). 

What does Malta have to offer to tech companies over other jurisdictions?

As a Government, we will do whatever it takes to ensure that we attract new niche economic sectors and ensure that such start-ups/ firms are provided with the necessary tools to strive and grow sustainably. This modus operandi has always been enshrined in my holistic and overarching vision aimed at boosting the digital economy industry in Malta. There are several incentives which tech companies can make use of and benefit from when relocating locally, such as Malta’s favourable and highly reputable tax regime. We have also introduced sandbox ecosystems whereby start-ups can test their products and be in a better position to roll-out their products thereafter. Apart from investing our time to ensure and consolidate FDI, we have also set out on a mission to attract talent – highly qualified individuals – and to address skills shortages that may be present in certain industries given the limited size and resources of the island.

AI is gaining ground in the tech world and is becoming more mainstream. Do you see it infiltrating the local market positively?

We aimed to position ourselves as trailblazers in the digital economy industry, and AI was a crucial component that we considered and introduced over the past years. Concerning AI, we were amongst the first jurisdictions to recognise the full potential that this technology had to offer and have set up an entity – Malta Digital Innovation Authority - that focuses specifically on such means of technology. It is also worthy to mention that we will soon begin rolling out AI-related projects in various sectors such as health, education, transport etc., as part of the Government’s digital transformation. I look forward to embracing and tapping into the potential, opportunities and benefits that AI has to offer.

There is a known lack of personnel in the tech space in Malta – what, if anything, is being done to solve this issue?

It is in our best interest to facilitate the process for tech specialists to come and reside in Malta. For instance, through an initiative spearheaded by Identity Malta - entitled as the Key Employee Initiative - individuals working in the tech-industry are eligible for a fast-tracked procedure when applying for dual residency/employment permit. Apart from that, as a country, we have also provided tax incentives for qualified individuals should they choose to relocate their operations locally. We are committed to further incentivising open working spaces and hubs. This would be highly beneficial for start-ups and SMEs, especially in the development phase of their business ventures to improve their networking and mentoring environment.

“As a Government, we will do whatever it takes to ensure that we attract new niche economic sectors and ensure that such start-ups/firms are provided with the necessary tools to strive and grow sustainably”

Given the current international issues of COVID-19, what measures are being put in place to safeguard businesses?

When the COVID-19 pandemic broke out the Maltese Government was quick to act, and in fact, we announced a financial package aimed at providing a financial lifeline to businesses that were experiencing liquidity problems since their operations came to an abrupt halt. The government launched the COVID-19 Guarantee to provide favourable loan facilities to companies facing a sudden and acute liquidity shortage precipitated by the said pandemic. Secondly, we wanted to eliminate prospective redundancies through the Wage Supplement Scheme which was administered by Malta Enterprise. We even assisted and further incentivized ongoing operations for teleworking, through the Teleworking Equipment grant.

The tech industry is booming due to a lot of work moving online due to COVID-19. Have local businesses been positively affected by this? Are there initiatives in place to maintain and support this increased workflow?

This pandemic has catalysed e-commerce and e-business to thrive. Several local businesses moved their operations online within a span of a few weeks, to be able to cater to their customers’ needs and respect the instructions put forward by the health authorities. This shift is also reflective of the consumers’ tastes, with practicality and convenience being everyone’s priority.

Unfortunately, not everyone was able to invest in an online system, and whilst recognising and considering all the obstacles being faced, we envisage on further incentivising and providing the needed aid to such companies. We are committed to working with industry stakeholders to develop a post-COVID-19 strategy that would include a digital economic mind-set for every local enterprise.

It has often been mentioned that Malta needs to diversify its economic niches. Can you explain what is being done?

The unprecedented times we experienced over the past months further highlighted Malta’s overdependence on a limited number of sectors. Tourism, which contributes largely to the Maltese GDP, got bruised during the pandemic. Such temporary closure of a crucial component that drives our GDP led to an abrupt halt in the operations of several businesses and individuals. The only way to mitigate this risk of being over-dependent on a small number of sectors is to adopt a strategy which focuses and builds on economic diversification. In investment, many experts in the industry would argue that the best way to mitigate the risk is to diversify your investment portfolio so that the investor would not shoulder the full burden of a shock in one investment. The same principles apply to economic growth, and, together with my team, I am driven to consolidating current sectors and attracting new niche industries to operate from Malta. In pursuing such a strategy, we would be future-proofing our economy and ensuring a more sustainable and resilient economic growth.

Giselle is a marketing professional and independent writer and proofreader. She runs Content for Success.