Building economic pillars
Claudio Grech, who has just taken over as CEO of SmartCity Malta, explains to The Times Business what the project is really all about and what impact will it have on Malta and its economy.
What, in layman's terms, is SmartCity Malta really all about? What is an IT city?
Put simply, SmartCity Malta is a knowledge-based township. The primary aim of SmartCity Malta is to become a destination for businesses primarily in the
ICT and media sector, transforming the local industry into a real global one serving international (such as, European and North African) markets from Malta.
SmartCity Malta will provide the necessary intelligent office space, state-of-the-art infrastructure and services required by local, regional and international companies to set up their operation and grow in Malta.
SmartCity Malta will create a cluster of companies that will develop into a critical mass of key industry players, establishing Malta as a regional leader in this sector.
Complementing the belief of leading industry players that their employees would benefit from a "quality environment", SmartCity Malta will also offer lifestyle amenities to create a harmonious work/life environment where businesses can succeed and knowledge workers can flourish.
There has been a lot of talk about employment. Now that the project has started, isn't it about time to say exactly how many people will SmartCity Malta employ, in what categories, how many will be locals and how many will be expats, whether the country can meet the demand, indeed whether it could deplete other industries in Malta from much-needed skills...? Indeed, in terms of skills required, how big is the gap between what is available now and what is needed and how is that gap going to be filled?
SmartCity Malta will be investing tens of millions of euros in the creation of top-tier office space. It follows logically that this office space is being developed on the basis of the projected potential growth of the local industry primarily by way of FDI and start-ups.
I believe that the country can reach the demand - proof of this is the huge strides made in this sector in the last years. I am confident that, with the positive and pro-active approach adopted by the local educational institutions and the private ICT training industry, these opportunities will be grasped and realised into quality jobs.
Will SmartCity Malta be able to absorb people made redundant by other industries?
There are two aspects to this question. Firstly, SmartCity Malta is not only for ICT and media professionals. A primary rationale underlying the notion of creating a township rather than just a technopark is the generation of jobs in supporting sectors such as facilities management, clerical and administrative jobs, retail, logistics, security and hospitality. The second aspect is the need for the workforce to retrain into higher value added sectors in order to allow the Maltese community to maximise on the benefits that SmartCity Malta will offer.
Will SmartCity Malta just employ people or will it put its money where its mouth is and train its own people? If so, what sort of financial allocations will be made for this project?
SmartCity Malta will invest in the infrastructure, intelligent office space, services and the marketing of Malta as a regional business destination. It will use its captive audiences in Dubai and the other SmartCity Malta projects, as well as leverage on Tecom Investments' international offices and business partners, to attract industry drivers and players to set up in Malta. If one looks at how Dubai Internet City and Dubai Media City have grown (today they have over 2,500 companies set up there) in just eight years one immediately realises the potential available for Malta.
Who are the big guys that will be attracted to Malta thanks to SmartCity Malta? What will they bring with them and what will they leave here?
The names of the multi-national companies setting up in SmartCity Malta will be announced in due course. However, don't just think of SmartCity Malta as a destination for the big players. I firmly believe that in the coming years Malta will have a new generation of SMEs in the knowledge-based industries. SmartCity will be assisting these companies in realising their potential and grow into international players. This is the top-most target which all the stakeholders should have: the creation of local intellectual property and its dissemination into global markets.
Judging by the Dubai experience, what will SmartCity Malta do to Malta, its economy, its workers and the people in general?
The project will give a face-lift to the local economy. It will catalyse the ICT and media industries into economic pillars side-by-side with tourism and financial services. I firmly believe that SmartCity Malta will also transform the south of Malta. Considering that, in a few years' time, Ricasoli will be the ICT and media business outpost in the Mediterrenean, one can imagine what spin-offs this will bring about for the localities in the proximity to the project.
Is there an estimate of the size of the project's multiplier effect on the economy? Taking Dubai as an example, what is the city's impact on the economy?
A detailed economic impact assessment of the project was carried out. The conservative scenario of the report states that once in full operation, the projected impact on the GDP will be to the tune of €690 million per annum while the government will net around an additional €100 million in terms of taxation. This report was also presented in Parliament when the project was debated and approved unanimously.
Will SmartCity Malta have its own electricity-generating system or will it take its power needs directly from the local grid? What is the estimated intake?
Like any other development, SmartCity Malta will use the national electricity generation infrastructure. Part of the land will be used as a distribution centre, which will not only benefit SmartCity but also the neighbouring localities. Power requirement estimations are still underway.
Does SmartCity Malta require any particular supplier close by to keep its operations going, whether that be an RO plant, a mini power station, etc?
As things stand today, SmartCity Malta will only require the facilities that the national utilities provide as the normal course of their business.
Why would, say, an American IT company want to come to Malta when it can very well operate in more competitive locations in other EU countries?
The same reasons why HSBC decided to bring and grow exponentially its service call centre in Malta apply here. Malta has made significant leaps in terms of infrastructure, skills, business environment and FDI-attraction incentives. On top of this, SmartCity Malta will provide a real state-of-the-art facility which any serious company (American or otherwise) would want to relocate. Today, it is a known fact that a major flaw in our national selling proposition is the lack of availability of top-tier office space together with the services required by these companies provided around that. It also is worth pointing out that company relocations are not only a function of cost. If that were the case, no company would set up in most European countries, which are by far more expensive than we are!
Are there any particular "products" or "services" that SmartCity Malta would want to attract most to Malta? Or, put in another way, has any study been made of the kind of products or services that can be made in Malta more profitably than in other countries? What do these studies show?
Research has been carried and other is underway. This is a continuously moving target. SmartCity Malta will primarily attract companies in a wide range of the ICT and media value chains. The full list of sectors is available on our website at www.smartcity.ae.
What other locations in the Mediterranean are competing with Malta for IT investment?
A cursory look at the national agendas of most governments (including those in the Mediterranean) reveals that most countries state that they want to "become an ICT hub". Many countries are indeed striving hard to catch up with the advancements we have made in this sector.
Given what is happening on the global plane in terms of fuel prices, a credit crunch and such like problems, would you not say that SmartCity Malta comes at a bad time?
On the contrary, I think it could not have come at a better time for Malta. An investment injection of this extent, the attraction of foreign players into Malta and the generation of employment opportunities will contribute to balancing the negative impact of the global crisis.
What would be the major positive spin-offs for Malta and what would be the biggest headaches?
The major spin-off would be the international reputation of Malta being a business destination. Taking a page out of Dubai's success story, Dubai Internet City was the first project which started the incredible pace of development and FDI in the Emirates.
SmartCity Malta will serve as a beacon for many local and foreign investors who could consider investing in business parks in other specialised sectors. I also think that business tourism will exponentially increase since many foreign companies serving international markets would be set up in Malta and the country offers a fantastic backdrop for business activity.
The biggest headache will be the continuous adaptation of the SmartCity and Malta selling proposition to the global trends in this sector, in which the most constant thing is the increasing pace of change.
One final question, of a somewhat personal nature: Don't you think it looks bad that the person who handled the negotiations on behalf of the Malta Government is then appointed CEO of that same project?
Absolutely not. Although I played a key role in the process, many people were involved in the discussions and negotiations process, including government departments, legal advisers and financial advisers. Moreover, the negotiated positions were in all instances subject to the minister's approval and the Cabinet's final prerogative.
Contrary to many impressions, the major discussions in the process revolved around capital investment and employment generation. I think that a minimum investment of $300 million, 5,600 jobs and the transformation of Ricasoli into the new business destination of the Mediterranean region are not bad at all.
The joint venture between SmartCity and the government was formalised over 14 months ago and since then both parties have become shareholders of a single joint venture. I was appointed as a director on this venture and my duty as such was to ensure the project moves from the drawing board to reality.
As far as for my acceptance in undertaking the role as CEO of SmartCity Malta, prior to doing so I wanted to make sure that the major local stakeholders of the project supported my appointment. I was not obliged to seek such support but I have no qualms in saying that, without their support, I would have not accepted the position.
Put simply, SmartCity Malta is a knowledge-based township. The primary aim of SmartCity Malta is to become a destination for businesses primarily in the
ICT and media sector, transforming the local industry into a real global one serving international (such as, European and North African) markets from Malta.
SmartCity Malta will provide the necessary intelligent office space, state-of-the-art infrastructure and services required by local, regional and international companies to set up their operation and grow in Malta.
SmartCity Malta will create a cluster of companies that will develop into a critical mass of key industry players, establishing Malta as a regional leader in this sector.
Complementing the belief of leading industry players that their employees would benefit from a "quality environment", SmartCity Malta will also offer lifestyle amenities to create a harmonious work/life environment where businesses can succeed and knowledge workers can flourish.
There has been a lot of talk about employment. Now that the project has started, isn't it about time to say exactly how many people will SmartCity Malta employ, in what categories, how many will be locals and how many will be expats, whether the country can meet the demand, indeed whether it could deplete other industries in Malta from much-needed skills...? Indeed, in terms of skills required, how big is the gap between what is available now and what is needed and how is that gap going to be filled?
SmartCity Malta will be investing tens of millions of euros in the creation of top-tier office space. It follows logically that this office space is being developed on the basis of the projected potential growth of the local industry primarily by way of FDI and start-ups.
I believe that the country can reach the demand - proof of this is the huge strides made in this sector in the last years. I am confident that, with the positive and pro-active approach adopted by the local educational institutions and the private ICT training industry, these opportunities will be grasped and realised into quality jobs.
Will SmartCity Malta be able to absorb people made redundant by other industries?
There are two aspects to this question. Firstly, SmartCity Malta is not only for ICT and media professionals. A primary rationale underlying the notion of creating a township rather than just a technopark is the generation of jobs in supporting sectors such as facilities management, clerical and administrative jobs, retail, logistics, security and hospitality. The second aspect is the need for the workforce to retrain into higher value added sectors in order to allow the Maltese community to maximise on the benefits that SmartCity Malta will offer.
Will SmartCity Malta just employ people or will it put its money where its mouth is and train its own people? If so, what sort of financial allocations will be made for this project?
SmartCity Malta will invest in the infrastructure, intelligent office space, services and the marketing of Malta as a regional business destination. It will use its captive audiences in Dubai and the other SmartCity Malta projects, as well as leverage on Tecom Investments' international offices and business partners, to attract industry drivers and players to set up in Malta. If one looks at how Dubai Internet City and Dubai Media City have grown (today they have over 2,500 companies set up there) in just eight years one immediately realises the potential available for Malta.
Who are the big guys that will be attracted to Malta thanks to SmartCity Malta? What will they bring with them and what will they leave here?
The names of the multi-national companies setting up in SmartCity Malta will be announced in due course. However, don't just think of SmartCity Malta as a destination for the big players. I firmly believe that in the coming years Malta will have a new generation of SMEs in the knowledge-based industries. SmartCity will be assisting these companies in realising their potential and grow into international players. This is the top-most target which all the stakeholders should have: the creation of local intellectual property and its dissemination into global markets.
Judging by the Dubai experience, what will SmartCity Malta do to Malta, its economy, its workers and the people in general?
The project will give a face-lift to the local economy. It will catalyse the ICT and media industries into economic pillars side-by-side with tourism and financial services. I firmly believe that SmartCity Malta will also transform the south of Malta. Considering that, in a few years' time, Ricasoli will be the ICT and media business outpost in the Mediterrenean, one can imagine what spin-offs this will bring about for the localities in the proximity to the project.
Is there an estimate of the size of the project's multiplier effect on the economy? Taking Dubai as an example, what is the city's impact on the economy?
A detailed economic impact assessment of the project was carried out. The conservative scenario of the report states that once in full operation, the projected impact on the GDP will be to the tune of €690 million per annum while the government will net around an additional €100 million in terms of taxation. This report was also presented in Parliament when the project was debated and approved unanimously.
Will SmartCity Malta have its own electricity-generating system or will it take its power needs directly from the local grid? What is the estimated intake?
Like any other development, SmartCity Malta will use the national electricity generation infrastructure. Part of the land will be used as a distribution centre, which will not only benefit SmartCity but also the neighbouring localities. Power requirement estimations are still underway.
Does SmartCity Malta require any particular supplier close by to keep its operations going, whether that be an RO plant, a mini power station, etc?
As things stand today, SmartCity Malta will only require the facilities that the national utilities provide as the normal course of their business.
Why would, say, an American IT company want to come to Malta when it can very well operate in more competitive locations in other EU countries?
The same reasons why HSBC decided to bring and grow exponentially its service call centre in Malta apply here. Malta has made significant leaps in terms of infrastructure, skills, business environment and FDI-attraction incentives. On top of this, SmartCity Malta will provide a real state-of-the-art facility which any serious company (American or otherwise) would want to relocate. Today, it is a known fact that a major flaw in our national selling proposition is the lack of availability of top-tier office space together with the services required by these companies provided around that. It also is worth pointing out that company relocations are not only a function of cost. If that were the case, no company would set up in most European countries, which are by far more expensive than we are!
Are there any particular "products" or "services" that SmartCity Malta would want to attract most to Malta? Or, put in another way, has any study been made of the kind of products or services that can be made in Malta more profitably than in other countries? What do these studies show?
Research has been carried and other is underway. This is a continuously moving target. SmartCity Malta will primarily attract companies in a wide range of the ICT and media value chains. The full list of sectors is available on our website at www.smartcity.ae.
What other locations in the Mediterranean are competing with Malta for IT investment?
A cursory look at the national agendas of most governments (including those in the Mediterranean) reveals that most countries state that they want to "become an ICT hub". Many countries are indeed striving hard to catch up with the advancements we have made in this sector.
Given what is happening on the global plane in terms of fuel prices, a credit crunch and such like problems, would you not say that SmartCity Malta comes at a bad time?
On the contrary, I think it could not have come at a better time for Malta. An investment injection of this extent, the attraction of foreign players into Malta and the generation of employment opportunities will contribute to balancing the negative impact of the global crisis.
What would be the major positive spin-offs for Malta and what would be the biggest headaches?
The major spin-off would be the international reputation of Malta being a business destination. Taking a page out of Dubai's success story, Dubai Internet City was the first project which started the incredible pace of development and FDI in the Emirates.
SmartCity Malta will serve as a beacon for many local and foreign investors who could consider investing in business parks in other specialised sectors. I also think that business tourism will exponentially increase since many foreign companies serving international markets would be set up in Malta and the country offers a fantastic backdrop for business activity.
The biggest headache will be the continuous adaptation of the SmartCity and Malta selling proposition to the global trends in this sector, in which the most constant thing is the increasing pace of change.
One final question, of a somewhat personal nature: Don't you think it looks bad that the person who handled the negotiations on behalf of the Malta Government is then appointed CEO of that same project?
Absolutely not. Although I played a key role in the process, many people were involved in the discussions and negotiations process, including government departments, legal advisers and financial advisers. Moreover, the negotiated positions were in all instances subject to the minister's approval and the Cabinet's final prerogative.
Contrary to many impressions, the major discussions in the process revolved around capital investment and employment generation. I think that a minimum investment of $300 million, 5,600 jobs and the transformation of Ricasoli into the new business destination of the Mediterranean region are not bad at all.
The joint venture between SmartCity and the government was formalised over 14 months ago and since then both parties have become shareholders of a single joint venture. I was appointed as a director on this venture and my duty as such was to ensure the project moves from the drawing board to reality.
As far as for my acceptance in undertaking the role as CEO of SmartCity Malta, prior to doing so I wanted to make sure that the major local stakeholders of the project supported my appointment. I was not obliged to seek such support but I have no qualms in saying that, without their support, I would have not accepted the position.