Malta's (potential) bright future through e-commerce

The rise of e-commerce in the globalised economy, with particular attention to the slow rise of e-commerce in Malta, was the theme of the annual conference of the Malta Communications Authority (MCA) held recently.

E-commerce: Towards a Borderless Economy attracted several foreign and local speakers who shared their knowledge and experience, giving pointers as to how e-commerce is developing and what should be done in Malta to accelerate its adoption.

"Think big but start small," was the advice given by Jason Brickell, from 6PM Management Consultancy in the UK. He suggested starting a web presence today and to build on it. He was confident that in a few years' time e-commerce in Malta should find itself in a framework where SmartCity Malta drives economic growth, Malta becomes an interactive gaming hub of the world and an e-commerce hub for Europe and emerging markets, Malta becomes an online learning centre of excellence, and all this bringing down the unemployment rate to less than two percent.

Steven Smith, from United Focus Pty Ltd in Australia, delivered a briefing on the rise of e-commerce in the country. He said this can attributed to several factors, including the fact that the commercial banks encouraged citizens to get online, Google made searching easier, and the pressures from competition and from globalisation were also felt.

Speaking of the future, Mr Smith said the critical success factors include getting faster internet access and making it cheaper; making websites easier to use; improving web developers' skills and practice; and businesses needing to be more strategic in terms of capacity, integration, culture and imagination. Businesses should also keep an eye on the developments in Google, the social networking phenomenon and the convergence of technologies.

One of the most interesting and relevant presentations was delivered by Ronald Attard, head of transaction advisory services at Ernst & Young. He referred to the latest data on Malta's e-readiness rankings which showed where the country is strongest and where it is weakest. While Malta ranked 23rd among the world's 70 largest economies in the e-Ready index published by the Economist Intelligence Unit, it was among the top 10 in terms of the availability and use of e-commerce and online public services and the quality of vision and policy of government for the ICT sector.

However, the survey also revealed that more needs to be done in certain sectors. Malta's overall legal framework and specific laws governing internet use need to be updated. The pre-conditions of applying e-business including literacy, education, internet experience, entrepreneurial attitude and innovation need to change. The availability, affordability and quality of telephony services, personal computers, Wi-Fi hotspots, the internet and digital identity cards is another area where a lot more can be done. The expected attractiveness of the general business environment over the next five years is also a factor.

Ernst & Young conducted its own survey among Maltese business organisations directly linked to ICT between September and October 2008.

According to the interviewees, Malta's key strengths include fiscal incentives, competitive labour costs, a multi-skilled English speaking workforce, a regulated environment, EU membership, quality of life and the ICT infrastructure in place.

However, there are also some key challenges and these include the relative unawareness (and misconception) of what Malta offers; low investment in R&D and innovation; quality and cost of internet access (bandwidth); the VAT rate compared to competing jurisdictions; labour costs (vis-à-vis a number of EU and third countries); and the size of the domestic market, with the lack of competition in sectors serving e-commerce providers, inability to base on domestic market to reach economies of scale.

In the second session where business-to-business (B2B) e-commerce was discussed, the emphasis was on the new landscape being created in a globalised economy.

"The new web is a very different thing. It's a tool for bringing together the small contributions of millions of people and making them matter," according to Armando Janigro, business development manager for self-service in the EMEA CRM business unit at Oracle.

He spoke of "the end of customer service" where "increased efficiency and cost savings aren't the only result. Slowly, we are separating services from the places where we are used to receiving them."

Maria-Jose Sobrini, director of the Internet Business Solutions Group (IBSG) at Cisco, warned that globalisation has changed the economic playing field but has not levelled it.

"Business control has shifted towards the customer. It is 'always on' when, where and how the customer wants," she said, adding that there is a mind shift with internet.

"The platform is more powerful and the biggest challenge is a good judgment and managerial competence to partner and collaborate in a global world. Less control usually means more power."

Mechthild Stoewer, senior scientist and consultant at the Institute for Secure Information Technology, Fraunhofer, revealed that 64.1 per cent of internet buyers do not go through the whole process of buying online and stop just short of authorising the online payment because of what they call lack of trust.

"IT security is the basis for trust," he insisted, while referring to a quote by Gene Spafford that goes something like this: "Security is like adding brakes to cars. The purpose of brakes is not to stop you: it's to enable you to go fast!"

Karl Galea, strategy planning executive at Vodafone Malta Ltd, accounted for the rise of online social networks such as Facebook and MySpace, also referred to a Web 2.0, that were repeatedly mentioned in the other presentations.

"Given at least 24,000 users in the Malta Network only of Facebook, it is strategically e-necessary for organisations to be e-ready," he warned. The reasons he gave are that this is no new area we can "try out", because 2.0 is not just a number since the community is leading in this area, and brands simply fit in.

Mr Galea gave some ideas as to why e-commerce has not yet flourished in Malta despite the fact that Malta is in the top 10 list in consumer and business adoption of new products and services.

He said that e-commerce is still treated as a new area, still experimenting and separate from the overall strategy and structures of a business organisation. To exploit Web 2.0 companies have to embrace it and "breathe 2.0 (online and offline)" in their business strategy, insisted the Vodafone Malta executive.

The full presentations of the conference are available from http://www.mca.org.mt.