2 THE LOCAL ICT LANDSCAPE THE CHALLENGES FOR THE LOCAL ICT INDUSTRY Similar to other industries, it is clear that the ICT industry in Malta is past the stage where it can attempt to achieve higher levels of economic activity on the basis of low labour costs. Incentive packages are no longer sufficient in attracting investment, because today there are equally attractive incentives in other countries. Investors seek profitable opportunities in countries offering the best prospects in terms of competitiveness. If Malta is to improve its performance in attracting FDI, greater focus on knowledge and innovation-based investment and on economic efficiency 10 is needed. These factors carry the promise of sustained growth in the wealth-generating capacity of the Digital Economy. SMEs within the ICT industry know that their main weakness in terms of growth is the small size of the local market. Some of these businesses are adopting a more outward-looking entrepreneurial culture that is focused on exports rather than relying on shortterm advantages in the captive domestic market. However, these SMEs face a multitude of difficulties. The World Economic Forum has identified a list of problematic factors for doing business in Malta. The top three are inefficient government bureaucracy, limited access to financing and insufficient capacity to innovate. Malta also lacks the adequate schemes for business angel investors 11, who are generally needed by start-ups to take off, and by established ICT businesses to expand. This may reflect Malta’s entrepreneurial culture, which tends towards lower risk or conventional “bricks-and-mortar” ventures. Currently, most local ICT companies are software services and hybrid solution providers and integrators. Few qualify as software products companies, deriving well over half of their sales from licence fees. This may suggest that less intellectual property, inherent in the software being developed, can be translated into patents or copyrights. Similarly, the lack of participation and contribution 10. The in open source communities limits the exposure of Maltese skills and the potential to increase FDI. The small size of the Maltese islands presents special opportunities for the ICT industry. These include the deployment of “first-in-the-world” nation-wide projects or “test bed” projects in strategic alliances with ICT multinational companies. Highlighting these opportunities is important in FDI strategy, especially when it comes to targeting ICT investment and building partnerships. With important events due to take place, with ‘including the hosting of the CHOGM in 2015, Malta’s EU Presidency during the first half of 2017 and Valletta as the European Capital of Culture in 2018, now is the time to launch a branding exercise. TRUE VALUE TO CITIZENS For the past twenty years, government has substantially invested in ICT. Government capitalised on the lack of complexity in Malta compared to large countries, which often have two or more levels and branches of administration, multiple police forces, several courts of justice and region-based healthcare systems. Government adopted policies favouring the consolidation of its investments, as well as standards to support such policies. This led to the adoption of corporate systems and shared services across all departments. A robust and resilient ICT infrastructure forms the back-bone of an interconnected government. Most of these initiatives were implemented in partnership with the private sector. Government also established a strong governance framework and strengthened the eCommerce legislative framework. More recently, Government inaugurated a TIER III Data Centre, 12 hosting government infrastructure and information systems. This Data Centre is the fifth data centre in Western Europe and one of only 34 data centres worldwide certified to reach the Tier III Facility Certification. term economic efficiency refers to the use of resources so as to maximize the production of goods and services - Sullivan, Arthur; Steven M. Sheffrin (2003). Economics: Principles in action. 11. Business angel is an affluent individual who provides capital for a business start-up. 12. Tier III Facility Certification verifies that each and every component within the MITA Data Centre can be maintained, replaced or upgraded without disrupting the service. 16