A thriving Maltese biotechnology sector by 2015

Finance and Economic Affairs Minister John Dalli addresses Monday’s ‘Realising a Thriving Maltese Biotechnology Industry by 2015’, which forms part of the eFORSEE Malta Biotechnology Pilot Project. In his speech Minister Dalli outlines government initiatives to spur research and development and the good deal of effort is being channelled to create an environment that is friendlier to high technology ventures – both of which are essential in staffing the promising field.

The prosperity of a nation is dependent on its ability to create value, that is, its value added. Thus increased prosperity can only be sustained by the production of higher value added products. Innovative products have a high value added as they can command higher prices due to their scarcity. Therefore, increased prosperity needs to be continuously fuelled through innovation.
NSO is currently working in order to compile a full set of economic indicators, as complete innovation benchmarking is not yet possible. However, statistics on the local business community published lately by NSO indicate that Malta’s innovative base is very weak. Employees with higher education constitute only four per cent of total employees in Malta. On the other hand these constitute 13.5 per cent in the EU-15 with the highest percentage reaching 20.9 per cent in Sweden and the minimum being 6.6 per cent in Austria.
The number of employees with higher education gives an indication of the innovative capacity of companies though not a full picture. The NSO survey also reveals that only 19.2 per cent of the interviewed enterprises introduce new or significantly improve products and only 14 per cent introduce new or significantly improved production processes. The sectors that contribute mostly to innovation are the manufacture of radio, television and communication equipment and telecommunications. When asking about the factor hampering innovation activity, the majority of companies felt that innovation is not important for their product.
The Government has laid down a number of incentives to spur research and development. During the last budget speech it was announced that 150 per cent of the expenditure on research and development could be decreased from taxable income. The Business Promotion Act also gives special tax incentives to companies that set up to undertake Research and Development. Companies in the Biotechnology sector qualify for these special tax incentives. Research and development also qualifies for investment tax credits.
The Government is also helping start-ups in innovative sectors as Biotechnology through the provision of the Kordin Business Incubation Centre (KBIC) and the Technology Venture Fund, which are both aimed at highly innovative and technological projects. The KBIC provides physical space and technology infrastructure in a convenient, yet low cost location, along with high speed internet access to its clients, making KBIC an ideal place to nurture, grow, and launch technology oriented businesses. It also provides access to finance, the expertise and the objectivity necessary to refine the venture’s vision, assist in the development of its business model, and build its teams. The KBIC also offers the necessary training and mentoring to enable each enterprise to manage its business effectively as well as networking opportunities. The Technology Venture Fund provides venture capital for high technology projects. These initiatives are already being availed of by a small number of companies in the Biotechnology sector.
Incentives need to be complimented with a sound administrative structure. We have just passed the Malta Enterprise Act through Parliament. Through this act these three entities will be merged together in order to create an efficient one-stop shop for the business community. Malta Enterprise has been entrusted with the focus on and continuous reassessment of niches that Malta is best suited to serve. Malta Enterprise will also market Malta as an ideal location for investments in these niche areas. Malta Enterprise will influence all services that have a bearing on industry competitiveness as the educational institutions. The Omnibus Act, which has also just been passed through Parliament, brought our Patent legislation in line with that in the EU.
Thus a lot of effort is being channelled to create an environment that is friendlier to high technology ventures. Of course, a lot still needs to be done and all these initiatives need to be further refined and marketed in order to spur increased innovation capability in Malta. Increased Research and Development and innovation are a EU wide challenge.
One must welcome foresight initiatives as the one which is being launched today as only through such exercises can be prepared for the challenges ahead in order to transform them into opportunities.