Wak­ing from a dream that vi­su­alised a rich ecosys­tem

With hind­sight, 2017 was a year with so many im­por­tant mile­stones. It started with the six­month ro­tat­ing EU pres­i­dency mired by a con­tro­versy about the Prime Min­is­ter’s fam­ily ac­cused of se­cretly own­ing a Panama off­shore com­pany Egrant where ill­got­ten gai

The Malta Independent on Sunday - - BUSINESS & FINANCE - Ge­orge M. Man­gion

This was ve­he­mently re­but­ted by Joseph Mus­cat who re­quested a mag­is­te­rial in­quiry to in­ves­ti­gate the ac­cu­sa­tions. He con­sid­ered the mat­ter so se­ri­ous that he chal­lenged his de­trac­tors in a snap elec­tion – one year ahead of end of man­date. This led to eight weeks of fierce de­bate and tons of mud­sling­ing among party stal­warts with a gen­eral elec­tion held on 3rd June. Mus­cat won his gam­ble with a larger share of the vote and the Op­po­si­tion has since started a marathon spree to re­place its care­taker leader. To­day, one will be cho­sen and as my crys­tal ball is not func­tion­ing, I can­not pre­dict the win­ner but I bet that the cho­sen one will have a tough task uni­fy­ing the party and its var­i­ous fac­tions. Be that as it may, there is still a lot of work that needs to be done for tiny Malta to es­tab­lish its fu­ture both on the do­mes­tic and in­ter­na­tional scene.

Next week we will have the re­sult of the Ger­man elec­tion where the favourite is that elo­quent lady from East­ern Ger­many. If Merkel is reap­pointed as Chan­cel­lor then the Macron/Merkel axis will most prob­a­bly so­lid­ify their grip on EU pol­icy post Brexit. Ob­servers pre­dict that the Macron/Merkel team will in­tro­duce, in­ter alia, stiff tax har­mo­niza­tion mea­sures that four years ago gave birth to the ugly twins – BEPS and ADIT. This nascent har­mo­niza­tion regime may in­ten­sify the drive to im­pose Com­mon Cor­po­rate con­sol­i­da­tion tax rules which if fully im­ple­mented may sound the death knell for our unique tax struc­ture. It may be the quiet be­fore the storm and one shud­ders to think that Malta be­ing the small­est mem­ber in the club is weak hav­ing lost the sup­port of the UK (its big­gest ally re­sist­ing har­mo­niza­tion). Alone, it needs to fight tooth and nail to re­tain its fis­cal ad­van­tages.

Read­ers may ques­tion if my gloomy pre­dic­tions are the cause of too much sun and the de­bil­i­tat­ing ef­fect of the hottest sum­mer in years. In­deed, I do sound like a prophet of doom. Rat­ing agen­cies tell us our rank­ing is high and NSO cal­cu­lates our GDP growth is reach­ing a cool fig­ure – three times higher than the EU av­er­age. Labour statis­tics are so good we are about to match Pres­i­dent Trump’s suc­cess in the US with­out the catch­phrase “Make Malta great again”. How­ever, in the midst of the 2018 bud­get con­sul­ta­tions, one is tempted to ask whether the trickle-down ef­fect is work­ing. This is a com- plex ques­tion and govern­ment as­serts that work­ers are ex­pe­ri­enc­ing a grow­ing af­flu­ence and higher stan­dard of liv­ing. Al­though wages are im­prov­ing, the ex­pec­ta­tion gap is grow­ing. This means that the share of wealth may not be dis­trib­uted as smoothly as wa­ter runs from the hills down to reach the val­leys.

This goes to the root of my ar­ti­cle bran­dish­ing an ide­ol­ogy to carry out a root and branch over­haul of our gar­den where a num­ber of trees contributing to this oth­er­wise rich har­vest may be threat­ened by la­tent de­ceases. Our erst­while fi­nance min­is­ter needs to plant a stronger va­ri­ety of fruit bear­ing trees. Up­root­ing old and de­cay­ing trees is a reg­u­lar task and as new plants take time to take root, one needs to act fast. A case in point is the an­nounce­ment by the Prime Min­is­ter that our frag­ile in­fra­struc­ture is the is­land's Achilles heel.

An­other fly in the oint­ment is bur­geon­ing traf­fic con­ges­tion and du­bi­ous air qual­ity. Mus­cat hints that diesel/petrol cars will be re­placed by elec­tric ones in less than 20 years. He said the govern­ment is work­ing on a na­tional blockchain strat­egy as “the dig­i­tal mar­ket is a big part of the EU's fu­ture". It begs the ques­tion: how can we suc­ceed in this am­bi­tious task if reg­u­la­tors are still in the dot-com era. In my opinion, this links per­fectly with my pre­dic­tion that if and when our fi­nan­cial ser­vices/iGam­ing sec­tors face a blitzkrieg from the omi­nous Macron/Merkel duo, we will need a plan B to save our ba­con.

This plan looks us straight in the eye. Sim­ply put, we need to in­vest money where our mouth is. This means enriching our re­search and devel­op­ment ecosys­tem. It is un­der­stood that this is no mean task. Plant­ing new trees calls for a heav­ier in­vest­ment in re­search and devel­op­ment and patch­ing up as we have been do­ing since In­de­pen­dence is no so­lu­tion. It is an open se­cret that lo­cal tech­nol­ogy lacks re­search fa­cil­i­ties such that our largest sin­gle ex­porter of mi­crochip does not carry out its main R&D lo­cally. Again, most of the phar­ma­ceu­ti­cal pro­duc­tion units do not har­ness the im­por­tant IP on the is­land. In­no­va­tion is the buzz­word and on this topic, it is per­ti­nent to men­tion that PKF had in­vited two lead­ers from the USA to speak at an event called “Blue­print for In­no­va­tion”. No spon­sors graced PKF brochure yet in a spirit of true cor­po­rate so­cial re­spon­si­bil­ity, it turned out to be a suc­cess­ful event and an in­vi­ta­tion was made to the Prime Min­is­ter to ad­dress the au­di­ence. This was ac­cepted and Sil­vio Schem­bri, par­lia­men­tary sec­re­tary at the OPM, ad­dressed the del­e­gates.

One of the key­note speak­ers, Gor Sargsyan is the pres­i­dent of Qbit­logic In­ter­na­tional, At­lanta (USA). His com­pany spe­cialises in build­ing multi-pur­pose ap­proaches and tools that syn­er­gize the power of ar­ti­fi­cial in­tel­li­gence and quan­tum com­put­ing to help hu­mans build and pro­tect soft­ware sys­tems across var­i­ous in­dus­tries. Gor is cur­rently based in Palo Alto Cal­i­for­nia which is the fore­run­ner of Sil­i­con Val­ley in­no­va­tion stunts. One can­not ig­nore the im­mense con­tri­bu­tion that re­searchers based in Sil­i­con Val­ley have made to cut­ting-edge tech­nol­ogy. Other speak­ers in­cluded Stas Gayshan MD, CIC Boston, Joe Woods MD, Cre­o­labs, Dr Jef­frey Pul­li­cino Or­lando Ex­ec­u­tive Chair­man MCST, Dr Leonard Bonello Se­nior As­so­ciate Ganado Ad­vo­cates, Mr Matthew Caru­ana, Man­ager ZAAR Crowd­fund­ing, Ing Joe Sam­mut CEO LifeS­ciences Park, speak­ers from MCAST and Univer­sity were also in­vited.

The good news is that both po­lit­i­cal par­ties promised in their man­i­festo to sub­stan­tially in­crease in­vest­ment in R&D, and con­se­quently PKF thinks that its ef­forts to at­tract a world class or­ga­ni­za­tion in this field does not come a mo­ment too soon. An­other in­ter­est­ing land­mark is the Boston-based Cam­bridge In­no­va­tion Cen­ter (CIC). It was here that An­droid co-founder Rich Miner built his unique Google An­droid soft­ware. What is so spe­cial about CIC? The an­swer is that as an in­no­va­tion hub it suc­ceeded in at­tract­ing ex­cel­lent start-ups which proved very ben­e­fi­cial for the US econ­omy through the gen­er­a­tion of pre­mium jobs and its high value-added in­ven­tions.

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