LINE OF SIGHT

Trade

29 Jun

Giselle Borg Olivier spoke with architect David Xuereb, President of the Malta Chamber of Commerce, about the Chamber’s Economic Vision 2020 and the collaboration and vision between the Chamber and Tech.mt.

One of the strategic principles outlined in the 2020-2025 Economic Vision is innovation and technology that is tangible and sustainable – what can/will businesses do to achieve this?

First, we need to have the mind-set, policies and regulations in the country that would motivate outside the box thinking, innovation, research, and everything that enables us to be creative and different… and disruptive. The setting therefore needs to be that, and we are not there at all.

In terms of innovation and creativity, Malta is very poor, and when we study other countries, we see that their opportunity for growth and development stems from this. Therefore, having the right mindset, the right infrastructure, and the right ecosystem for people to think outside the box and not be afraid of making mistakes or failing, will lead to success. Malta does not have that DNA and we are therefore asking all the stakeholders in our economy to contribute to this mindset.

Moving on to the topic of sustainable… anything that we do cannot be short-lived. There are many business opportunities that could be exciting and earn us some good money just for a while, while potentially disrupting other people's quality of life or nature's equilibrium, only to find out that it’s short-lived, unsupported, potentially being criticized and therefore unsustainable.

We have taken a number of initiatives in Malta as of late that have earned us money but that have not been thought out appropriately; they have been launched too fast for them to be embraced by everybody including the international community and therefore haven’t allowed us to capture the benefits of those industries over the long term. We've been criticized, we have had to defend, we needed to redraft – all these things are not sustainable.

Family businesses in Malta are an integral part of our business ecosystem; they need to adapt and ensure that their businesses survive generation after generation, while also being profitable for the family and potentially shareholders.

In this case, sustainability is also about ensuring that policies and laws support the natural shortcomings of family businesses because those are a very strong pipeline of intrapreneurship in Malta.

The Chamber of Commerce has a family business committee, which we run together with the Ministry of the Economy, that’s mainly populated by members of the Chamber of Commerce. It was also the subject matter of our National Conference two years ago when we celebrated our 170th anniversary – we thought it fit that family business should be the topic of the day, because we were focusing on the sustainability of business in work. So here we are again two years later with our economic vision talking about sustainability and vision development, which are fundamental to a vision of moving forward which makes us stronger than we are today and coming back and ensuring that we have the right infrastructure for that.

You mentioned that recently there were certain projects that were handled and short-lived – could you give examples of those?

For example, the IIP scheme – I’m not criticising the IIP scheme per se because we have said that the IIP scheme has brought a lot of value to Malta. It is a rigorous system that has been criticised, maybe unfairly to some extent, because we have not all been singing from the same hymn sheet, and the packaging and the way the scheme was presented was wrong.

So, although we have an opportunity to develop a product for revenue generation for the country that will earn serious money to our members and to the people in general, the IIP scheme will eventually contribute towards pensions, because the packaging and manner with which it was sold wasn’t ideal, it brought not only a lot of weight onto the scheme, but also bad press and a bad reputation to Malta.

The Chamber has criticised the Government for putting us in a situation where we need to re-engineer this and the Government has acknowledged this. It has also asked for the Chamber's contribution to ensure that the new scheme is structured, packaged and presented in a manner that is consistent with what is expected out of the apolitical objective population of this world. Ultimately, the new scheme needs to be clearly separated from the old one to ensure that the message given to those people who have maybe started to doubt whether Malta’s jurisdiction is the right place to conduct their business, understand that we have extracted and addressed the shortcomings from the previous scheme and we now present a new scheme which we are proud of.

Although we are surrounded with other schemes in the world that are less qualitative and whose due diligence is poor to say the least, we are the ones who have packaged our scheme in a rush and in a manner which was too aggressive, and have therefore caught the attention of those people who are jealous of our economic performance potentially and also think to harm our country for reasons, which we do not appreciate.

When we talk about quality we need to ensure that the people speaking about quality are people who understand what quality means, whether it is tourism, construction, or manufacturing; whether it is the quality of the cleanliness of our environment, the quality of our landscape, the quality of our agriculture – all of those things that contribute towards a sustainable and smart economy.

We also need to talk about resources – it is it is not enough to talk about how to manage the large number of resources that come to our country, or whether we are preparing our local resources to adapt appropriately to our ever-evolving economy. But rather, how prepared are we to ensure that the different cultures working in our economy feel comfortable and accepted?

People need to be trained and sensitised to ensure that there is alignment or appreciation of the difference of cultures between people coming from the Far East, Africa, Europe – wherever their origin – to the Maltese culture and the Maltese business lines. Because we are not doing this well enough, we have a human resource turnover every 18-24 months which means that there's a lot of wastage not only in the cost of recruitment, but also in the cost of training, the cost of adjustment, and the cost of ensuring that we have understood each other. That is a serious drain on the resources of our country with us mistakenly thinking that we're growing the economy because we have larger numbers. The sustainability of growth is not just about the numbers but also about how to retain the people that we attract to Malta to be able to contribute in a more effective, more economical, and therefore sustainable manner.

“Clearly the ‘sons and daughters’ of the Chamber – Tech.mt, TradeMalta, Education Malta, Malta Business Bureau – are very important parts of the business of the chamber”

Another principle that was mentioned was the issue of human capital – are we generating the kind of skills and quality that is needed in the workplace?

During our Economic Vision session, we not only had the 27 top operators, CEOs and managing directors of the industry, but also the rector of the University of Malta and the principal of MCAST.

The common theme was the concern of the mismatch between the requirements of the industry, and, even worse, what we think is needed in the future, compared to what is being produced through our education system. And I don't necessarily imply solely University or MCAST, I'm also referring to what is being done in our primary and secondary schools.

When we see that the worlds of AI, blockchain, 3D printing, quantum physics require people who think outside the box and are able to combine their knowledge of soft skills, communication skills, artistic skills, we realise how the thematics of our primary and secondary schools, in the form of standard subjects, implies that this mismatch between supply and demand is growing every day.

This means that our competitive advantage over other countries and other players in the industry is lacking, which seriously implies that we are going to hit a brick wall.

We believe that it is not only up to the regulators, to the government, or to the educators to resolve this; this needs the serious partnership of the players within the business community because they are the ones who are able to envisage what is required on the industry floor in the near future.

We can learn from other qualitative jurisdictions in the world, such as Singapore, which looks at education purely as an opportunity for the growth of youngsters into an industry that will keep on growing into the future – that is true sustainability.

Moreover, our education system doesn't seem to do much with respect to our need for good governance, therefore values – honesty, integrity, the difference between good and bad, those things that make us honest people in our society – need to find their way back into the primary and secondary school benches, with our teachers, with our leaders in education, and certainly with our peers in the society, our politicians, our business leaders, the church – all those people who can influence and therefore need to ensure that they are passing on the right message.

We want the our future entrepreneurs, our next business leaders, our operators - all the people that take decisions all the time, to be able to take those decisions in light of the core values that are important - honesty, integrity, the good governance side of life. This is what our education system needs to be doing and this is, in my opinion, a crisis moment.

Is this going to be the next plan of action?

Absolutely. The Chamber of Commerce is putting together a thematic committee; the way the chamber's business will be conducted over the next years will change. We don't feel that it is just a matter of passing the buck to a minister or a prime minister, or to a head of an authority in Malta, but rather working with them (with our thinking, our suggestions, and our recommendations) though our thematic committees, and this is certainly one of those.

You mentioned people coming over to Malta and the fact that they're only here for 18 months or two years at the most, but is Malta in a position where it can really attract foreign talent? What makes it attractive? Or where is it lacking in attractiveness?

The first attraction is that Malta is a beautiful country with a stable and growing economy; so for anyone who's looking to develop his career in an environment that offers a good lifestyle for himself and his immediate family, Malta is super attractive.

We should be thinking of supporting these individuals, especially those who really add a talented contribution to the country, through tax incentives and so on to make their life easier. We need to attract people to develop their skills and abilities in a business that is thriving and growing – Malta is growing this business, especially in the services sector, towards internationalisation and through tech, because tech is not just the place where you work but how you externalize and export tech.

Malta is good at that, especially with this digitisation platform, and has been for the past 20 years or so, so we want to retain this success moving forward. That's one of the recommendations in our Economic Vision – it's useless being great many years ago, we need to be great, always. So, if there are any changes to be made in our tech, our 5G Technologies and so on, immediate action must be taken, because that will impact our infrastructure and our best practices and would therefore attract the right talent to Malta.

We're speaking about improving productivity by optimising technology; however, are local businesses open to this? Malta tends to have a bit of an old-school mentality. Do you think that this is still prevalent or is it changing? And if so, is it changing fast enough?

Here I am inspired by the younger generation members of the Chamber of Commerce which put together a Young Chamber Network, because young people are not only like-minded, but are also the ones who are able to provide energy, direction, motivation, and speed into most of the business community top processes, and technology is central to practically everything that they are working on.

Tech is one of the thematic committees that the Chamber of Commerce will be championing internally at the Chamber, and has for the last year or so championed through our public-private partnership with the government in promoting Malta as a tech island to our peers abroad and ensuring that we remain at the top of our game.

When Malta decided to be the top internet country where internet was fast, we connected the internet pretty much everywhere and everybody is connected all the time today. But when this all started 20 years ago, little did we understand how important this was, not only for entertainment, but also for business. Many companies considered Malta as their jurisdiction of choice not only because of tax incentives or because it's a beautiful island and part of the European Union, but because our tech infrastructure was so great.

Over the years I think we have lost that edge, but we're about to reinvent ourselves with the infrastructure that we provide which is not only physical infrastructure, but also talent infrastructure, and that's why Tech.mt was considered a priority and Government thought it fit to partner with the Chamber of Commerce to ensure these objectives are met.

You mentioned Malta as a tech island… Three years ago, Malta was the Blockchain Island and that seems to have fizzled out. What do you think is going to be different with Malta as a tech island?

In our national business plan on tech we need to make sure that our objective is real and tangible, and for which infrastructure has been thought out. The Blockchain Island brand that we managed to promote internationally was great when we were at the point of selling, but we did not realise that it required infrastructure which is not only legal and policy driven, but also required talent and training to have blockchain really functioning in Malta. The legal and legislative side was probably the best around, but it was not enough to attract the people and the businesses that should have come to domicile themselves here. We were looked upon by our competitors, they realized what we did and were faster in ensuring that they developed the infrastructure to attract those businesses and probably beat us to it.

Therefore, here we are again to have Tech.mt and the Chamber of Commerce focusing on tech, not only for Government but also for businesses and we need to ensure that we don't run before we can walk. Of course we are here in competition and we need to be fully prepared; hopefully we have learned from our shortcomings and we will structure for achievement.

You mentioned banks - there's a very well-known issue when it comes to opening bank accounts for foreign companies. Do you see a solution there?

Banks are an essential part of our life and of business. Whenever we intend to grow in any area of business, we need to ensure that there is a banking system that supports it.

The Government and the nation have worked hard and invested lots of time and money in finding industries that we can move into to be creative and innovative, and to grow. But unfortunately, we were not nimble enough to have the banks on the same page, and, if our current banks are not able to support our vision, then we need to ensure that there are banking financial institutions that will.

Banks need not be the traditional banks but can be other banks that are potentially not even physical. Of course, we need to have our regulators who are able to choose from these non-physical banks, but we certainly have an urgency now to be able to have the right banking systems.

The European Central Bank (ECB) has become a major player in the way our banks are regulated. Most of the decisions that the banks are taking today are driven by ECB-driven policies, also on account of what happened following the financial crash in 2007 and 2008, and so what they do is right and proper.

Our banks are able to operate rather efficiently and the Chamber has been asked to pinpoint customers who are potentially not happy with the service bought from banks, only to find out that most of the times those unsatisfied customers are the ones who were unable to provide the banks with the due diligence required. The Chamber of Commerce has checked and this is not just a Malta thing, it’s a European thing – if the bank is serious and therefore large, it would necessitate the same requirements to open a bank account. It may not be as simple as it used to be, but it’s also much more tangible, sustainable and serious.

What we are missing is having more players in the local market that can serve the diverse needs of our industry. We expect the two big banks and the other two supporting banks to do it all. Banks are all about measurement of risk, and Malta, due to its small size, has small numbers and high risk – therefore a high risk for very small returns is not appealing. This is the difficulty that we have as a country.

Malta has gone through a rough patch in terms of reputation. Has there been a noticeable effect on business and investment?

Yes, of course. The nation found itself in a time when the economy was doing well and we thought that things were potentially still going to keep on booming - business as usual – and, then all that happened, happened, culminating in a mess.

Whatever was wrong and criminal in our country, and anything that remains to be uncovered, needs to come to the fore at the earliest possible. We have seen a change in cabinet and the Chamber of Commerce has been very vociferous in what needs to be done, but we didn't want to just criticise from the outside, we decided to roll up our sleeves. We put together several experts in the areas of governance and we promised the incumbent (we didn’t know who it was at the time) that we were working on this.

When Robert Abela was sworn in as Prime Minister he invited us to a meeting that same week where we presented our good governance document and explained that we had over 60 recommendations on what needed to be done on three levels: the government governance level, the regulation level, and the business level.

We explained the detail of everything that we were thinking about and we found that the government was very appreciative of the fact that an entity such as the Chamber of Commerce, that doesn't necessarily have competence or interest in governance, took the leading role. We consider governance as a major risk to anything that has to do with commerce and industry.

The first actions taken by the government seem to have gone down well, not only with the Chamber of Commerce members and the business community, but also with the international community. There is still much more to be done, but certainly the actions taken were serious, important, and commendable and we stated clearly that what we saw until now was relatively good, although there could have been a couple of things that could have been done better.

When we talk about the Economic Vision, governance remains a key issue because it is useless talking about how we want to be sustainable, we want to grow, etc. if good governance is not part and parcel of that economic vision. We are now working to ensure that we provide the tools, the education, and sensitivity to all our members to make sure that we contribute towards a business ecosystem that ensures that we all know what we're dealing with. Therefore, integrity and honesty are not to be taken for granted but are to be regulated through a manner driven by serious people.

You presented the five-year economic vision for the Chamber of Commerce. What is the vision for the Chamber and Tech.mt as a collaboration?

The chamber is going through a major change right now. It has drafted a business plan for its members and a business plan for itself to ensure that whatever the chamber is doing adds the maximum value to its membership – that's #1.

Number two, we have reached out to all the youngsters, and to the new technologies out there that need to form part of our overall discourse to ensure that we are completely relevant.

The third is that we have looked at our statute to ensure that our actions and our business is as business-friendly and as efficient as possible. And here we are on the eve of our Annual General Meeting to be held on the 25th of March, where I'm going to be presenting a number of revisions to our statute that will enable us efficient actioning of the chamber business.

The Chamber over the next years will be focusing on its thematic committees that will be highly relevant to our members and will give life to the vision as set out in our Economic Vision document.

Clearly the ‘sons and daughters’ of the Chamber – Tech.mt, TradeMalta, EducationMalta, Malta Business Bureau – are very important parts of the business of the chamber. We are there because we are partners; we want to make sure that each entity is fully supported, fully engaged, and fully productive because that is the value that we’re going to be adding not only to our membership but also to Malta. I am in constant contact with the directors and CEO of Tech.mt to ensure that all actions and decisions are taken efficiently.

Is your vision, ‘Malta as a Tech Island’?

Absolutely; tech can add value to Malta. Malta is an island with limited resources, apart from human capital, therefore we need to ensure that the tech infrastructure, which is no doubt a major contributor to anything we're doing today and in the future, and the policies and legislation that support that infrastructure are optimum. Therefore having all industries and all tertiary educational systems, understanding where Malta is going and how tech is supporting that, means that the decisions taken in our education, in our conversation, in our entrepreneurial choices, in our investment choices, in our policies regulations, are in the same vein.

Would you say that Malta is competing against the likes of Silicon Valley?

Absolutely. Why not? Tech does not need land space, it does not need high-rise buildings, it does not need infrastructure that we cannot afford because it will damage the country or take up space which we do not have. We have been very clever as a nation to always think of the next step and we all know that tech is driving the world. So why should we, being a small island where we can take decisions from today to tomorrow compared to many other countries, not place ourselves at the forefront position?