With its considerable potential for growth, the sector for research and development is the next step if the economy is to witness further industrial and enterprise development, Malta Enterprise chairman Alan Camilleri told The Times Business.
The allocation in the national Budget for R&D is around €200,000, but last June Malta Enterprise upped the game and earmarked around €4 million for R&D projects as part of the European Regional Development Fund (2007-2013) €20 Million for Industry project which incorporates seven incentives. So far, interest in the scheme has been encouraging.
"The idea was to have a framework which would incentivise and assist companies wishing to engage in proper R&D through the development lifecycle: from technical feasibility studies to prototyping to product development to design to market access, to commercialisation, to marketing... from idea to market," Mr Camilleri said.
"We need to continue to assist enterprises to take on ideas from inventors and inventions, and then evaluate the technical feasibility and the commercial viability of that idea. If we discover that the idea can be commercialised, then we will assist the enterprise and promote it.
"It would help if the country had an established venture capital culture. We need more effort - both by ourselves and by the private sector - to be catalysts to the creation of this culture."
Mr Camilleri explained that any company conducting "serious" R&D is eligible to apply for a grant. The EDRF scheme will co-finance the cost of wages, equipment, materials and contractual research specifically incurred as part of the research project.
"We carried out an experiment this year in terms of equity financing," Mr Camilleri pointed out. "We issued a call for applications from companies which might have ideas which they wanted to research and required our assistance to do so. We appointed a consultant from overseas to sieve through the ideas and fine-tune them to make them commercially viable."
Mr Camilleri emphasised that venture capital for some projects was hard to come by if the basic idea did not present good prospects for return on investment. Fourteen projects were submitted for consideration. Training workshops were held and business plans were reviewed to optimise their commercial potential. The shortlist now features three projects of a manufacturing/services nature, and the consultant is now in a position to use the ideas to tap venture capital from overseas.
Mr Camilleri insists that much more R&D is conducted in Malta than is publicly known. A significant number of SMEs carried out research on behalf of larger companies entirely on their own. Statistics did not capture these functions because R&D projects were kept confidential and some firms preferred not to apply for funding rather than reveal details of their research.
Firms which represent considerable foreign direct investment in Malta usually keep their main research function at their headquarters. Trelleborg is a major exception. Malta Enterprise is working to convince major manufacturers to bring over value-added components of their business to Malta, including R&D, by offering substantial assistance.
"We are being very directive in the way we want investment to happen," Mr Camilleri emphasised. "If we were given a choice between expanding laterally or vertically, we would choose the latter. That is the only way to anchor these companies to Malta and avoid fly-by-night operations."
Meanwhile, more effort is being channelled into fostering a healthy R&D culture locally. The University of Malta recently established its Commercialisation Office which is also working on issues like intellectual property policies and patent registration.
Regular meetings are held between Malta Enterprise, the University's rector Prof. Juanito Camilleri, and the Malta Council for Science and Technology to ensure that proposals and projects in the field are jointed.
"The core elements of the research 'ecology' need to be synergised," Mr Camilleri said. "Industry, business, fundamental research and the policy framework must be synchronised. In terms of infrastructure, Malta Enterprise cannot go it alone. The bio-tech park is a case in point. We are heavily involving the University and the Health Department is to come on board. We can create a knowledge village for health services and health sciences, where all labs, facilities and equipment will be pooled together to give better services to the bio-tech park. There is a positive predisposition from all parties concerned, which is very important."
A new call for applications for the ERDF schemes will now be made in a few weeks' time.
"Funds are available until 2013 and are boosted by another €0.5 million from our budgets," Mr Camilleri explained. "If we start to realise that companies are putting in more of their money into R&D, we will widen our assistance. The government will offer even further aid if the net worth to the economy is getting bigger and bigger, and if more jobs and knowledge, and a supply chain are being created."