The fact that Standard & Poor’s raised Malta’s credit rating for the first time in 20 years, from ‘BBB+’ to ‘A-’ with stable outlook was welcome news for all. This came back to back with other positive news. In August, Fitch confirmed Malta’s ‘A’ rating but upgraded its forecast from stable to positive. A month later, Moody’s confirmed Malta’s ‘A3’ ratings underpinned among other factors by a resilient economy, healthy economic growth and a steady downward trajectory in government debt levels.
Furthermore, Finance Minister Edward Scicluna in his Budget speech projected a deficit of 0.7 per cent of GDP for 2016 and 0.5 per cent for 2017. Economic growth is also projected to reach 3.5-4 per cent in 2017.
The above results are not a coincidence but mainly the result of: the government’s ‘hands on’ approach in economic management; strong economic growth during the last three years which shall be averaging three and four per cent between 2016 and 2019; reforms in the energy sector as well as large- scale projects in education, healthcare, tourism and transport infrastructure; a general increase in the employment rate for those aged 20 to 64 fuelled by rapid growth in the employment of women to 54 per cent from 36 per cent; and budgetary consolidation and a consistent improvement in qualitative and quantitative fiscal performance.
Methods of the past will not enable us to raise the bar and reach new standards in quality, economic and social planning
Such an unprecedented economic performance brings with it a number of challenges (particularly for a small country like Malta), which if not addressed with a long-term view, may create a bottleneck for further growth and economic performance particularly in sectors such as the digital economy, financial services, manufacturing and tourism among others.
If we want to continue raising the bar and maintain our edge as a fast and nimble ecosystem, such challenges can only be overcome if we focus our energy, economic and social planning on key strategic priorities which can be the catalysts to future proof our country for the challenges ahead and trigger untapped economic potential.
■ Malta’s ICT infrastructure is in a good place when it comes to high-speed broadband access and availability, and can meet the country’s demands for the immediate future. However, the development and deployment of Next Generation Access (e.g. upgrading hybrid-coax-fibre networks to the latest standard, and Fibre to the Home rollout to support Gigabit speeds) needs to be accelerated to support the country’s targets for economic growth and social development for the coming decades.
Competitively priced access to high-quality, high-speed broadband (100Mbps and above) on a European benchmark is fundamental to Malta’s competitiveness in terms of attracting more FDI, further growth in the digital economy, and overall improvement in the Maltese citizen’s quality of life.
Focus on exceeding the EU’s Digital 2020 Agenda, including 50 per cent of fixed broadband subscriptions having speeds higher than 100Mbps, and a resilient, future proof national telecoms backbone infrastructure is a key priority.
This can be achieved through regulatory intervention and/or PPP (public- private partnership) models to create more competition at the retail level. The announcement in the 2017 Budget of a submarine fibre optic link between Malta and Gozo and another one linking Malta’s backbone to Marseille, France, is also a great step in the right direction.
■ The quality of the national infrastructure shapes our lives. Transport links, digital networks, water and energy systems, waste management, social housing and the general upkeep of our country improves the quality of our lives and economic performance/productivity for decades to come.
I believe that long-term planning in these areas is key in raising the standard of our infrastructure. The UK’s Infrastructure and Projects Authority published the second ‘National Infrastructure Delivery Plan 2016-2021’ covering all infrastructural projects for that period.
The first national infrastructure plan published in 2010 and subsequent updates to it provided an integrated strategy of how the UK government would prioritise, plan, finance and deliver critical infrastructural projects and programmes in all sectors.
I believe this is a great model to follow in order to upgrade our national infrastructure and address the infrastructure deficit in a structured, planned and coherent fashion.
■ Skills Gap is the difference between the skills job seekers currently have and the skills employers need to fill vacant positions. Particularly in the digital economy this gap is significant, and if not addressed from now can lead to a slowing down in the performance of digital economy sectors like ICT, online gaming and e-commerce among others.
We also risk missing out on opportunities to attract high-value activities like IT development to other jurisdictions. On average, employment in the digital economy grew by 10 per cent each year between 2005 and 2015. The average annual employment growth within the digital economy over the past five years was eight per cent.
This means that the rate of employment growth in the digital economy is substantially higher than that of the economy in general.
For example, at the end of 2015, there were almost 11,000 people employed in this sector. Just for perspective, during the academic year 2013-14, there were only 220 graduates with a bachelor’s degree in ICT and 110 with a diploma level course (e.g. MCAST). Only 10 per cent of Maltese graduates are in the field of computing/ICT. This is far too low.
So apart from having a skills gap in finding local talent for technical specialist roles in high-end digital economy sectors, demand for general IT roles is expected to continue outstripping local supply. To address this, there should be a long-term focus on education, academic staff, and raising awareness of ICT as a career option and an alternative to the traditional professions.
This needs to be part of a national plan to steer our educational system towards the sectors where our economy will be thriving in the long run.
As more industry players continue to drive the digitisation of their business models and processes, it will also become crucial for graduates in other traditional professions to embrace technology as a driving force in their field of work.
What got us here won’t take us there. The methods of the past will not enable us to raise the bar and reach new standards in quality, economic and social planning.
This government, with such remarkable economic achievements and reforms under its belt has an excellent opportunity to keep implementing its vision, doing things differently and better to keep the current levels of performance for the country.
Joseph Cuschieri is executive chairman of the Malta, Gaming Authority.