Thursday, December 3, 2015

Doing business in Malta – IT companies Perspective

In recent years Malta has become a popular destination for online gaming companies, in fact more than 400 licenses have been issued, this represents more than 10% of the global online gambling market.  Some may argue that they chose Malta just because the Government grants corporate and personal tax breaks.  This is just part of the story, IT related companies today are looking to operate in a certain culture, look for expansion possibilities and local talent.   We have to keep in mind all this when promoting ourselves abroad to potential investors if we want to keep enticing I.T. companies to set up shop in Malta.  We have to identify and capitalize on what sets us apart.

I.T. companies tend to move in next to each other, in business economics this phenomenon is known as agglomeration.  They know that their costs diminish significantly when this happens, they keep abreast with recent developments and they even tend to poach each other’s key employees.  This happened years ago in Silicon Valley, as California provided a startup friendly legal framework and the fact that Stanford University, which is just a 15 minute drive away, recognized the importance of offering specialized hardware and software engineering courses.  This helped companies choose this area as a starting point.  The more businesses moved in, the more other competing companies started being attracted to the area as well.  In Malta areas such as the Life Sciences Park in San Gwann offer much potential in this regard, as it is within walking distance from the University of Malta making collaboration projects easier, whilst Smart City technology park in Kalkara with planned office spaces for around 11,000 people makes it the biggest potential economic concentration in Malta.
In the last 10 years educational institutions in Malta started offering computer and technology courses in all levels and our workforce is today very much IT oriented.  The University of Malta and other institutions recognizing the current and future value of the technology industry and offer courses which teach practical skills and training which is easily transferable to the workplace.  Employers value these type of realistic abilities over qualifications in theoretical knowledge.   The local talent is also embracing the idea of lifelong learning where employees take up courses, either locally or through distance learning, during their personal time to keep abreast with latest developments and to improve their careers and employability potential in the future.
Our Mediterranean climate is one of our best selling points, as foreign talent will not hesitate to move over to Malta to join an already established company which might be seeking to expand or one requiring a particular set of specialized skills.  Life is not just work and IT companies value recreational activity and family life, especially for younger employees, who might be starting a family and moving to a new country.  Malta offers a safe environment, with relatively low crime figures, commuting time is low when compared to other countries, even when taking in consideration traffic jams.  Housing is more than available with competitive rates for renting and accessible prices for aspiring homeowners. Leisure activities and nightlife are also abundant on the island and available all year round.
Malta’s laws are being harmonised with European Union legislation and most of our commercial law is based on the English system.  However IT companies don’t just look at taxation agreements and financial legislation they also focus on protection and copyright issues, in this area much work is still needed for laws regulating patent legislation, business innovation and intellectual property protection.  In order to kickstart their business here, investors would rely on our legislators to address any shortcomings or loopholes in our legal system, so they can put their mind to rest that their investment is safe and sound here in Malta.
IT related companies also look at infrastructure, networks and physical connectivity when evaluating one particular country over another.  Our major road networks still revolve around the main arterial routes built during the post-war economic boom in Malta and any expansion throughout all these years revolved along the same routes with no particular major plans to modernise our road network infrastructure through alternative modes of transportation.  IT networking, telephony and internet infrastructure on the other hand made huge advances forward with fibre optic technology being available in recent years as well.  Nevertheless a recent EU report shows that even though our networking technology is comparable to the best countries our prices are not competitive at all and may be even classified as costly.  Our electricity infrastructure is improving, with new major distribution centres nearly completed or just commissioned in areas where expansion is expected such as Smart City combined with the fact that the interconnector is actually guaranteeing peace of mind since we are no longer isolated and the fact that the Government is committing itself to reduce emissions, even if there is still work to be done in this area, we are on the right track.
Other successful countries such as Singapore and Ireland managed to build an ecosystem of interacting and related IT companies.  A case in point happened in 2008 when Google decided to build it’s European hub in Dublin.  They created thousands of jobs and changed the workforce completely.  Years later Facebook decided to open it’s European centre in the same area.  Facebook also attracted smaller companies that work closely with it to nearby centres such as Zynga, which is completely dependent on Facebook online to offer it’s games.  Their presence is also creating a lot of business minded entrepreneurs and their workforce’s skill-set is resulting in a lot of new startup companies.
Other countries are waking up to what these countries have achieved, and some are even keeping an eye on what Malta is doing after our niche specific success in the gaming industry.  We have to continually strive to improve and re-invent ourselves and use our natural resources such as location and climate to our advantage whilst investing heavily in areas such as infrastructure and workforce training.

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