Issue link: https://maltatoday.uberflip.com/i/1081437
maltatoday | WEDNESDAY • 13 FEBRUARY 2019 13 OPINION www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way George M. Mangion gmm@pkfmalta.com The writer is a partner in PKF, an audit and business advisory firm PKF Malta is pleased to have had the privilege to visit the CIC Thought Leadership cen- tre in Rotterdam, the Nether- lands. The centre is the home for about 550 innovative com- panies and is built to syner- gise with CIC's international community of entrepreneurs, investors, and established busi- nesses. CIC is based in Boston, US, and has recently expanded to Rotterdam. This city is in a very central location just a one-hour flight south of Am- sterdam, a "footstep" away from the Belgium border and really close to other European hubs. Like Malta, the Dutch popu- lation are fluent in English and prides itself to be a melt- ing pot of different cultures. The visit to Rotterdam was a sequel to an event "Blueprint for Innovation" held two years ago, supported by Fi- nance Malta at the Microsoft Innovation Centre, Skyparks Gudja. This saw an expert lineup of speakers which included (among others), Gor Sarg- syan, MD, Qbiticlogic Inter- national Atlanta USA, Stas Gayshan MD, CIC Boston, Joe Woods MD, Creolabs, Kenneth Farrugia, President FinanceMalta, Ing Joe Sam- mut CEO LifeSciences Park, speakers from MCAST and University while Parliamen- tary Secretary Silvio Schem- bri, responsible for innova- tion, gave the opening speech. Comments at the event were positive and all agreed that the island needs to do more to boost its contribution to R&D which based as a percentage of GDP is one of the lowest in the EU and in this context, one may recall that the gov- ernment in its 2019 budget is pledging to open the taps for more investment. The good news is that both political parties promised in their election manifesto to increase investment in in- novation and consequently PKF thinks that its efforts to attract a world class organi- sation in this field does not come a moment too soon. With hindsight, two years later and little progress has been registered to achieve this goal. Alas, the objective of having an innovation and business accelerator centre of calibre can prove to be a true catalyst to anchor exist- ing manufacturing commu- nity and attract new ones in Blockchain. This roadmap is an ambitious one, noting how European governments are in competition to attract inter- national companies and start- ups particularly in the wake of Brexit. Which brings us as to why PKF Malta is keen to put its shoulder to the wheel and attract investment in this re- gard. Three years ago, it pio- neered a familiarisation trip to Massachusetts Institute of Technology (MIT) in Boston, US. This visit was to explore links to promote Malta as a potential business accelerator and/or Life Sciences hub for innovators, inventors and en- trepreneurs. It is interesting to note that the Massachu- setts 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. Needless to say, that with its supportive campus environ- ment it houses an incredible number of talented students and as part of its diversity and its intensely creative at- mosphere, both the arts and science flourish in all their forms. It is no stranger to ac- colades - rated as the world's best university in chemistry; economics; linguistics; mate- rials sciences; nanotechnol- ogy and astronomy. Another interesting land- mark is the Boston-based Cambridge Innovation Cent- er (CIC). This houses more than 1,000 companies in an impressive building sporting 50,000 square metres of pre- mium office and co-working space across eight facilities. Other six centres are located in St. Louis, Missouri, Miami, The Netherlands, Poland and Australia. A number of high-profile companies know their ori- gins at CIC - including HubS- pot, which now employs over 1,100 people, and raised $125 million through its IPO last year, and Greatpoint Energy, which several years ago an- nounced a $1.25 billion deal to build reactors in China. CIC also has a non-profit sister, the Venture Cafe Foun- dation (this provides a Forum for venture capitalists to scout and help fund new talent). Having toured CIC in Boston US, the PKF delegation were guests at the Venture Cafe - an organisation which funds promising talent. Back to Malta, and upon re- flection one concludes that the country is not in a politi- cal mindset to favour research and development. The man- tra at Castille is supporting multi-million construction projects and by granting pub- lic land on preferential rates to a handful of hoteliers. It ar- gues, that it is the only way to fight the pangs of low-priced accommodation currently paid by mass tourism. Hence, the slogan of building six-star hotels. This contrasts sharply with the pittance paid on R&D. It comes as no surprise, that the combined expenditure on MCST, University and other agencies falls short of the 2.0% of GDP which is the norm for progressive Western countries. By paying peanuts, you do not succeed to become the birthplace of a nexus of superior minds in the Med. Party apologists say that the island is too small to be a lead- er in innovation. Its education system is fragmented albeit a costly venture which serves to churn graduates yet few PhD excel in science, maths and ICT subjects. It is true that the economy is racing ahead fuelled not by a rally in ex- ports but by a sustained push in domestic demand. Thus the sustainability of manufac- turing, aviation, financial ser- vices and other components in exports is trailing while tourism and iGaming sec- tors (which are both volatile) come in as a welcome boost. The latter are ratcheting demand for foreign work- ers. Government originally promised that capital reaped from selling the ITS land to a bidder will be channelled in building a new campus cost- ing €80 million in Smart City. Many assumed this can be an ideal venue to host an in- novation centre. So far, such plans to construct the centre have not materialised so the policy to attract mega busi- ness in Blockchain, Fintech and A.I can only be a mirage. Needless to say, without top- end R&D facilities it remains a pie in the sky. Granted, it is not easy to jump on prover- bial unicorns that roam suc- cessfully in Silicon Valley. We observe many countries including Saudi Arabia, which try to emulate the commercial success of Boston, New York and Silicon Valley. In conclu- sion, it was three years ago, that PKF Malta on behalf of bona fide clients applied for a subvention from the S&D fund - hosting millions accu- mulated from IIP proceeds. This was not conceded. Since its inception, the Social and Development Fund has paid no heed to support R&D and only invested in buying shares in local banks, Istrina donations, and lately a con- tribution towards social hous- ing. Can our country, albeit small and lacking indigenous raw materials rise to the occa- sion and surf gloriously over the tide to seize this R&D op- portunity? We can still do it. George Mangion Wanted – a paradigm shift in R&D The sustainability of manufacturing, aviation, financial services and other components in exports is trailing while tourism and Igaming sectors come in as a welcome boost