Budget 2018

Photo by Baskal Mallia

October 2017

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The Malta Independent on Sunday | 15 October 2017

Budget 2018: th

The new Opposition leader’s reaction to the Budget Speech tomorrow night will be the next key budget event and one can expect Adrian Delia to pull no punches. The same will go for the Prime Minister’s final word on Tuesday. With Budget 2018 having been largely a non-controversial affair, the reactions to the government’s fiscal plans have not been as scathing or as plentiful as usual. Here’s the feedback in a nutshell.

Where’s the surplus, Delia asks In his first reactions on Monday righty after the Budget Speech, new Opposition leader Adrian Delia accused the government of a lack of long-term planning, claiming that, despite all the talk of the government having attained a budgetary surplus, the government had actually increased the national debt by €1 billion.

He also took aim at the situation on the country’s roads and schools, he insisted that the better roads that are being promised by the government would not solve the traffic problems plaguing drivers. Delia said the PN would do things the right way, such as by bringing in planners and engineers to plan for the future. There should also be studies on the future road usage and capacity.

Delia said the government had also failed to acknowledge the shortage of teachers and noted that while the PN had built a new school every year the current government was still promising to build the same schools it promised to build last year.

AD - empty property issue being tackled at last Green Party Alternattiva

Demokratika in its first reaction this week said it was satisfied that the government has opened its eyes on the need to tackle the problem of empty properties and introduce measures for these properties to be put on the market.

The country’s financial surplus shows that there is a willingness to balance public revenue and expenditure after many years of neglect. AD said, however, that, “We cannot but ask about the contribution to this surplus of tax paid by so-called letterbox companies. The strengthening of laws against tax evasion in other countries, whatever the Maltese government wants and thinks, will certainly affect such income in the near future. This is income derived from evasion of taxes in other countries.

These countries are already working to tackle this issue. The Budget Speech ignores this fact.”

Arts Council Malta applauds E70 million for cultural heritage, arts, media and creative sectors A yearly analysis of the national budget conducted by Arts Council Malta reveals an overall increase of 10 per cent for culture, with a total budget of €70 million for cultural heritage, the arts, media and creative sectors.

The 2018 culture budget is estimated to be at 1.6 per cent of total government expenditure, retaining the increasing trend registered in recent years and the highest to date.

Per capita public investment in 2018 is expected to reach €159 an increase from €138 in 2017 and €122 in 2016. The public funding portfolio awarded by

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The Malta Independent on Sunday | 15 October 2017

he reactions in a nutshell Arts Council Malta to artists and organisations increased from €1.9 million to €2.1 million.

The largest sectoral increase of €3.4 million is attributed to interdisciplinary activity and directly related to the role of Valletta 2018 European Capital of Culture as a platform for diverse creative activities. Expectedly there was further investment directed towards Valletta 2018 Foundation totalling €8 million, doubling that in 2017.

An overall increase of 36% is also registered in the allocation for Public Cultural Organisations (PCOs) with a total of €19.5 million, almost double the allocations in 2016. This includes a substantial increase of 19% from 2017 allocated to festivals organised by PCOs, which now have a total budget of €1.8 million.

Some environmental aspects addressed but biodiversity ignored In its reaction, actually the only reaction from an environmental organisation so far to Budget 2018, BirdLife Malta noted that although the Government is introducing positive measures which benefit certain aspects of the environment, it still has to prove itself where the protection of biodiversity is concerned, specifically bird protection.

It said that measures such as those related to waste, the use of electric cars or gas-powered vehicles and the initiative to plant more trees in Malta are all positive. BirdLife also commended the government’s plan to set up the ‘Ambjent Malta’ agency to protect Natura 2000 sites.

BirdLife Malta looks ahead with enthusiasm to actively participate in the development of this new agency.

However, BirdLife Malta said it could not ignore the fact that whilst in other environmental aspects “this government has shown the courage to take decisions, with regard to biodiversity protection – especially the protection of birds – it still has to prove that it can be taken seriously and make its position clear, taking a step forward from its current stance which seems to be that it does not care at all”.

Developers positive The Malta Developers Association was “both satisfied and proud: that the government accepted several of its proposals including: The extension of the scheme for first time buyers; New incentives for second time buyers who have arrived at a point in life when they need to enlarge or reduce the size of their residence; The grant of a maximum of €25,000 to owners of dilapidated property to enable them to restore the property and rent it to the Housing Authority; The extension of the reduction in stamp duty for the purchase of property in Gozo; and Incentives for the regeneration of property in Urban Conservation Areas.

Employers welcome fiscal manoeuvrability According to the Malta Employers Association, Budget 2018 “is a reflection of a growing economy and a fiscal situation

which is allowing government more manoeuvrability and fiscal space to introduce a range of targeted measures to seek a better balance between economic social and environmental objectives”.

The MEA noted the contentious public holidays issue has been somewhat subdued for 2018 with an additional one day leave to employees. “This,” it said, “should give sufficient breathing space for the social partners to address the strain on competitiveness which a reduction in productive days entail, and design compensatory measures.”

The increase in the VAT thresholds from €14,000 to €20,000 should be a welcome measure to many SMEs and is a good way or recognising their contribution to the economy, together with the increase of the Microinvest funds from 30k to 50k, and to 70k in Gozo. The Association also welcomes the measure whereby employers can offset outstanding balances with amounts owed by government to improve liquidity.

On the social front, the MEA noted numerous benefits aimed at improving the situation of pensioners, and addressing the property and rental markets without destabilising such markets. The budget also looks ahead of the one year term of the budget and addresses longer term issues such as transport, the gas pipeline and the setting up of a committee to analyse the impact of Brexit on the Maltese economy.

ForUM welcomes vacation leave entitlement, but says it’s not enough ForUM acknowledged the improvement in the vacation leave entitlement for workers but recommended that the government continues working to give back the public holidays falling on weekends in their entirety.

The union urged the government to head towards the abolition of pension capping and give the option to workers to pay the full NI and get the full pension.

Moreover, it said, further incentives for secure third pillar pen-

sions would be welcome.

The government, ForUM said, must do its utmost to make key careers in education and health more attractive than other careers with the same level of education.

ForUM lauded the government’s efforts to improve the status of both educators and nurses and believes that now it is time for long term plans that span over 15 or 20 years. ForUM believes that the government must think outside the box and introduce a flexible system within the civil service.

Chamber of Commerce, Enterprise and Industry The Malta Chamber noted that its calls for the government not to introduce any surprise measures and new taxes were largely heeded. This, it said, is to the advantage of business momentum.

The main new measure announced this year in this regard, relates to the introduction of a deposit and refund system on plastic and glass beverage bottles. The Chamber said it looks forward to the opening of formal consultations with the authorities to ensure that the objectives of this environmentally-friendly measure will be achieved through fair and equitable implementation on all direct operators whilst ascertaining the sustainability of existing waste management schemes.

With regards to better regulation, the Chamber welcomed the long overdue announcement on the offsetting of payments between private operators and Government.

For the third consecutive year, the Malta Chamber called on Government to acknowledge

the fact that companies based in Malta are still paying among the highest energy rates across the EU. Although the local business rates were decreased in 2015, the competitive nature of the international markets led to higher reductions elsewhere. In advance of the Budget, the Malta Chamber proposed a number of measures that would help businesses overcome the expensive tariffs incurred, including an improved Night Tariff framework, purchasing flexibility as well as the introduction of privately managed energy distribution substations.

The Malta Chamber said it is disappointed that, once again, none of these measures were considered in the Budget.

The Malta Chamber noted the announcement and decision to re-introduce public holidays falling on a weekend as vacation leave although it must be made clear that discussions with the Employer bodies are ongoing with a view to ensure that the final effect of this measure is cost-neutral to employers.

Hotels and restaurants calls for regularisation of unlicensed accommodation The Malta Hotels and Restaurants Association welcomed the budget’s fiscal consolidation, the increase in the budget for the Malta Tourism Authority and measures that aim to improve the long-term sustainability of the general environment. The Association called on the government to implement concrete measures to address the issue of irregular and unlicensed accommodation and other services which are creating an unfair level playing field for legitimate businesses and resulting into millions of euro in forfeited revenues for Government. MHRA said it recognises the government’s efforts towards achieving progressive growth of the tourism sector and looks forward to working with the Ministry for Tourism to revisit the current national tourism policy with the aim to ensure long term sustainability.

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The Malta Independent on Sunday | 15 October 2017

FIMBank Senior Vice President discusses the importance of Correspondent Banking Head of Financial Institutions and Senior Vice President at FIMBank, Corinne Lanfranco gives her take on the role and impact of correspondent banking: “Correspondent banking relationships are critical to all financial institutions since it is a vital means to facilitate crossborder movement of funds.

Banks can access financial services in different jurisdictions and provide multi-currency crossborder payment services to their customers, supporting international trade and promoting financial inclusion.

“Whilst financial institutions have traditionally maintained broad networks of correspondent banking relationships, this situation has changed drastically in recent years. Banks providing these services are reducing the number of their respondents and scarcely establishing new ones” says FIMBank’s Head of Financial Institutions. The impact of this trend is uneven across jurisdictions and banks, with the greater risk of being cut off from the international payment networks. This implies a threat that cross-border payment networks might fragment, and that the range of available payments options being heavily reduced. Financial fragilities have been accentuated as the crossborder payment flows are concentrated through fewer correspondent banking relationships or maintained through alternative arrangements. These fragilities could undermine affected countries’ long-run growth by increasing costs of financial services and negatively affecting bank ratings.”

Lanfranco adds, “Unless a bank has the necessary connections through clearing houses

Corinne Lanfranco

and payment channels, or the required network of correspondent banks willing to handle its payment flows in various currencies, it cannot support its own clients’ transfers, nor offer correspondent banking to other banks (referred to as downstream correspondent banking).

Aside from the operational network that has to be in place, banks have to abide by numerous regulations, including the recommendations set forth by the FATF (Financial Action Task Force) which are recognised as the international standard for the combating of money laundering and the financing of terrorism. When establishing correspondent banking relationships, correspondent institutions are required, among various obligations, to perform customer due diligence on the respondent institution and gather sufficient information about the respondent institution to understand its business, reputation and the quality of its supervision.”

Lanfranco describes how correspondent banking has been globally impacted by what is called “de-risking”, in certain jurisdictions and sectors. This is a situation where financial institutions terminate or restrict business relationships with entire countries or classes of customers to avoid, rather than manage risks. Various considerations pertaining to the individual circumstances of each institution will direct the decision and strategy on correspondent banking business. Derisking is a complex issue driven by various considerations including profitability, reputational and liability risks, changes in banks’ financial risk appetite, increased compliance costs, etc.

Various factors come into play

when assessing correspondent banking risk, including but not limited to the jurisdiction, the products/services a bank offers and its customer base.

According to Lanfranco, banks have developed an increased sensitivity to the relevant risks associated with correspondent banking and have consequently cut back services for respondent banks after careful consideration of criteria such as sufficient volumes versus compliance costs, the risk of jurisdictions, as well as KYC/AML/CFT policies and procedures and their effective implementation. This is still a pertinent challenge which the financial industry faces regularly.

In the wake of the de-risking surge which affected the international community in the last few years, local banks in Malta have had their fair share of challenges to manage.

“If a bank is not serviced through an international network, it will not be in a position to provide international payments services to its own clients

in various currencies. Local banks have to meet the exigencies of their upstream correspondent banks. In assessing the risk of their respondents, the correspondent institutions must ensure that the assessment is sufficiently robust to consider all the relevant factors. Different levels of inherent risks must be clearly understood and appropriate controls applied accordingly, failing which an exit strategy is implemented,” says Lanfranco.

Lanfranco closes by highlighting FIMBank’s standing in the correspondent banking network scenario, “FIMBank prides itself on its longstanding relationships with prime international institutions whose expectations and risk appetite have always been well maintained. We have invested in resources, tools and systems to ensure our constant adherence to international compliance standards. We have very stringent policies and an Anti-Financial Crime Programme with a risk-based approach which has

been recognised by our partners as a key driver to safeguard our common interests. Risk factors in our business segments and the applicable risk mitigants have been acknowledged and commended, thus allowing us to retain our key relationships unscathed.

Aside from our network of global players, we are also a direct participant of Target2, the real-time gross settlement system for the Eurozone. We therefore offer these facilities to our clients, individuals, corporate entities and selected financial institutions to actively facilitate and support the bank’s main activity which is trade finance through our core pillars. In fact our new state of the art digital banking platform, FIMBank Direct, is a milestone demonstrating our commitment to provide an enhanced banking experience to our customers on the basis of a strong infrastructure built to support international settlements, forex and fixed term deposits.”

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The Malta Independent on Sunday | 15 October 2017

Vehicle taxation – adding insult to injury ■ Alfred A. Farrugia The surplus that the government is boasting about is meaningless when it comes to the thousands of car owners and drivers.

The government estimates that in 2018 €122.7 million in revenue will be collected from driving licences, motor vehicle registration tax and the annual circulation licence tax – the highest amount ever.

In the same year, the government is planning to invest €40 million in road construction and improvements – a higher amount than previous years, but a far cry from one of the main electoral promises of €700 million over seven years.

This means that in 2018, the government will be collecting €82.7 million more from car owners and drivers, than it will be investing in road construction and improvements.

Between 2013 and 2018, the government will have collected a total of €652.3 million in vehicle taxation, but it is only investing €96.3 million in road construction and improvements, apart from other funds from the European Union (EU).

So what is the government doing with the balance of €556 million euro collected over six years?

It is clear that if and when the electoral promise of €700 million euro is implemented, it will simply mean that the government is just paying back what it has already collected!

There is a very easy explanation why we have traffic congestion. Traffic congestion is the direct result of the lack of investment in road construction and improvements over a long period of years.

Vehicle taxation in Malta as a percentage of total taxation is the highest in the European Union, according to the latest publication “Taxation Trends in the European Union”, 2017, issued by the European Commission (Table 70, page 223). https://ec.europa.eu/taxation_cu stoms/sites/taxation/files/taxation_trends_report_2017.pdf In 2015, under this administration, the percentage went up to 3.7 per cent from 3.4 per cent in 2014, reversing a trend that had been going down for a number of years!

The Prime Minister was joking when he said the fuel prices in Malta had been kept low. The prices of petrol and diesel in Malta have been substantially higher than the EU weighted average for a number of months.

Given the monopoly enjoyed

by Enemed Company Limited, in contravention of Article 37 of the Treaty on the Functioning of the European Union (TFEU), the high prices of fuel in Malta are the responsibility of the government itself and not of the market because it is the government that fixes the prices of petrol and diesel in Malta.

At 56.079 cents per litre, the price of petrol in Malta – net of

duties and taxes, but including the profit, is the third highest in the EU after that of Denmark and Estonia.

Can the government let us know how much profit Enemed is making from the sale of petrol? When is the monopoly enjoyed by Enemed going to be removed?

It is clear that the thousands of car owners and drivers are getting nothing from the surplus, which the government is claiming to be making.

In addition to traffic congestion as a result of inadequate investment in the road infrastructure over the years, car owners and drivers are bur-

dened with the highest rate of vehicle taxation in the EU. A real case of adding insult to injury!

Unless car owners and drivers join forces to request relief from the burden of vehicle taxation and an improved road network, they are likely to continue to be ignored by the gov-

ernment.

Those who are interested are invited to sign the petition https://www.change.org/p/hondr-ian-borg-reduce-vehicletaxation to reduce vehicle taxation.

Alfred A. Farrugia is a member of the Malta Automobile Club

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The Malta Independent on Sunday | 15 October 2017

Blockchain, Bitcoin and cryptocurrencies

Budget seeks to future-pr

Blockchains are not merely a business opportunity, but a way to change how governments serve their citizens and how private companies serve their clients – David Schranz

Budget 2018 was, overall, an uncontroversial affair – no new taxes, no tax increases and no painful measures to leave people wincing every time they visit an ATM. According to the Prime Minister, who has overseen the first Budget in decades working with a budgetary surplus, has described it as a budget “that only gave and that took nothing”.

But many, in particular the Opposition, have taken the government to task for what they see as a failure to have created any new economic sectors. Such naysayers, however, have utterly failed to note the government’s distinct push for Blockchain, Bitcoin and cryptocurrencies – the new frontier of financial services and a potentially lucrative area of economic activity for the country willing to take the leap into this brave new world.

The government, Finance Minister Edward Scicluna stressed in his Budget Speech last Monday, is committed to making Malta into a centre of excellence in Blockchain, in the belief that the technology could become a leading economic growth engine.

In the coming months, the government will be building a Blockchain lab at the Malta Information Technology Agency

Don’t dismiss Bitcoin, IMF chief tells central bankers

Christine Lagarde

Christine Lagarde, the head of the International Monetary Fund, has a message for the world's central bankers: Don't be Luddites.

Addressing a conference in London last Friday, Lagarde said virtual currencies, which are created and exchanged without the involvement of banks or government, could in time be embraced by countries with unstable currencies or weak domestic institutions.

"In many ways, virtual currencies might just give existing currencies and monetary policy a run for their money," she said. "The best response by central bankers is to continue running effective monetary policy, while being open to fresh ideas and new demands, as economies evolve."

The most high-profile of these digital currencies is bitcoin, which like others can be converted to cash when deposited into accounts at prices set in online trading. Its price has been volatile, soaring over recent years but falling sharply earlier this month on reports that China will order all bitcoin exchanges to close and one of the world's most high-profile investment bankers said bitcoin was a fraud.

For now, Lagarde said, digital currencies are unlikely to replace traditional ones, as they are "too volatile, too risky, too energy intensive and because the underlying technologies are not yet scalable."

High-profile hacks have also not

helped, she noted. One notable failure was that of the Mt. Gox exchange in Japan in February 2014, in which about 850,000 bitcoins were lost, possibly to hackers. Following that, Japan enacted new laws to regulate bitcoins and other cryptocurrencies.

But in time, she argued, technological innovations could address some of the issues that have kept a lid on the appeal of digital currencies.

"Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays, so I think it may not be wise to dismiss virtual currencies," Lagarde said.

Lagarde's comments appear at odds with the views of JPMorgan Chase CEO Jamie Dimon, who this month described bitcoin as a fraud and said he'd fire any of his traders if they caught dealing in the digital currency.

In a speech laying out the potential changes wrought by financial innovations, Lagarde also said that over the next generation, "machines will almost certainly play a larger role" in helping policymakers, offering real-time forecasts, spotting bubbles, and uncovering complex financial linkages.

"As one of your fellow Londoners — Mary Poppins — might have said: bring along a pinch of imagination!"

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The Malta Independent on Sunday | 15 October 2017

roof the economy (MITA), and it will provide civil servants with Blockchain training.

The government will also create a Blockchain hub to assist companies looking to invest in the technology, while it will also aim to educate and inform businesses on its benefits. Blockchain technology will begin being used for digital certificates issued by the Malta College for Arts, Science and Technology, the National Commission for Further and Higher Education and the Institute of Tourism Studies.

Technologist David Schranz, the co-developer of Malta’s first Blockchain application – a distributed ledger application targeted at property transfer management remarked recently at the application’s launch, “Blockchains are not merely a business opportunity, but a way to change how governments serve their citizens and how private companies serve their clients. The main priorities should be regulation and incentives to attract the right capital and talent to stimulate growth in this sector.

“Rolling out such technology as bock chain is easier in Malta since the country enjoys a strong financial system, talent, entrepreneurial spirit and a can-do approach that can turn our island into a base and a test-bed for new sectors and technologies. Malta has become a centre of excellence with an enviable reputation in many sectors, and not only ones that are ICT related. The formula, so to speak, is already tried and tested and can therefore be replicated in other areas such as Blockchain.”

Speaking about the advantages of blockchain, David Schranz explained how the technology enables any two parties to make an exchange without the oversight or intermediation of a third party, strongly reducing or even eliminating counterparty risk. “This means that the users are in control of all their information and transactions. Furthermore, when using blockchain one can claim that data is complete, consistent, timely, accurate and widely available.”

What is Blockchain technology?

Blockchain technology has a significant potential to transform business operating models in the long term. Blockchain distributed ledger technology is more a foundational technology—with the potential to create new foundations for global economic and social systems—than a disruptive technology, which typically "attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly."

The use of blockchains promises to bring significant efficiencies to global supply chains, financial transactions, asset ledgers and decentralised social networking.

Major applications of blockchain include cryptocurrencies—including Bitcoin, BlackCoin, Dash, and Nxt —and blockchain platforms such as Factom as a distributed registry, Gems for decentralized messaging, MaidSafe for decentralized applications, Storj and Sia for distributed cloud storage, and Tezos for decentralized voting.

A some major banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.

What is Bitcoin?

Bitcoin, hailed in some quarters as the future of currency, is perhaps the best-known Blockchain creation. It is essentially a digital currency created and exchanged without the involvement of banks or governments. Transactions allow anonymity, which has made it popular with people who want to keep their financial activities, and their identities, private.

The digital coins are created by so-called ‘miners’, who operate computer farms that verify other users’ transactions by solving complex mathematical puzzles. These miners receive bitcoin in exchange. Bitcoin can be converted to cash when deposited into accounts at prices set in online trading.

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The Malta Independent on Sunday | 15 October 2017

Can budget surplus solve our innovation deficit?

George M. Mangion

Having a research and business innovation unit in Malta matching that of Silicon Valley is not a fantasy dream similar to when Alice in Wonderland was caught staring at the Looking Glass.

Mr Mangion can be contacted at gmm@pkfmalta.com or on +356 2149 3041

It can prove to be a true catalyst to anchor existing manufacturing community and attract new ones. This dream is an ambitious one as governments in Europe are in competition to attract blue-chip companies and start-ups particularly in biosciences, fintech and blockchain technologies.

An excellent effort was made this week when various companies and government agencies supported the Innovation Summit opened by Parliamentary Secretary for Digital Economy, Financial Services & Innovation Silvio Schembri. The event was attended

by Edward de Bono – Malta’s pioneer in brain training and the father of Lateral Thinking. Both the Education Minister and the Minister for the Economy, Investment and SMEs gave their contributions and waxed eloquent about the need to attract and retain new talent. This event followed another successful event called ‘Zest’, which was organized and funded by the Malta Communication Authority. The 2018 Budget made a token gesture by giving two-year tax breaks to PhD students of whom a mere 30 qualify annually.

Equally worth mentioning was the event “Blueprint for Innovation” organized and sponsored exclusively by PKF at Microsoft Centre Skyparks last June. PKF introduced Stas Gayshan as the keynote speaker. He is the managing director of Boston-based Cambridge Innovation Centre and a parallel organization to MIT University. The event saw an extended morning session and showcased an expert line up of speakers. These included Gor Sargsyan, President, Qbiticlogic International, Silicon Valley USA, Joe Woods Director, Creolabs, Kenneth Farrugia, Chairman FinanceMalta, Ing Joe Sammut CEO LifeSciences Park, speakers from MCAST and the University's Physics Department were invited. Prime Minister Muscat was unable to attend. Gor Sargsyan is the President of Qbitlogic International, Atlanta (USA) which is a US-based company specialising in building multi-purpose approaches and tools that synergize the power of artificial intelligence and quantum computing to help humans build and protect software systems across various industries.

Many multinational companies have opened their base in Silicon Valley where companies scout for the best talent. The Compass Global Startup Ecosystem Ranking of 2015 found Silicon Valley to be the world’s leading innovation region incorporating venture capital investment, start-up company exit valuations, talent pool and entrepreneurial supports and networks. For example, Samsung launched its business Accelerator four years ago located in Palo Alto's University Avenue and acts as an incubator for software start-ups. Inventors mingle with start-ups who form an integral part of the Samsung Accelerator, discussing projects with venture capitalists and others from the Silicon Valley tech community. This is called an active ecosystem and is basically what glues the fabric of innovation and design talents together to create high value-added products.

It is precisely what Malta lacks. Innovation is slowly becoming the new buzzword because both political parties promised in their election manifesto to substantially increase investment in Innovation. We promised the EU that we would increase the mere 0.7 per cent of GDP annual contribution by up to four times. The 2018 Budget makes no extra allocation. PKF thinks that its efforts to attract a world class organization in this field does not come a moment too soon although regrettably its altruistic attempts to fan our feeble flame of innovation was met with negative support from government agencies branding it as another sound bite. Strangely, the head of the Sovereign fund remarked that trying to support a US-branded innova-

“ ”

For many years, budget speeches in Malta promised venture capital but this never took off. It is a given fact that the best start-ups look for VCs that can plug them into broader ecosystems to provide additional leverage and extend their vision.

tion hub concept is like putting the cart before the horse. Paradoxically, resistance to creating an ecosystem is so ingrained that some state agencies label it as spurious and proclaim it does not help generate wealth.

Extra millions so crucial for research make policy makers ululate.

For many years, budget speeches in Malta promised venture capital but this never took off. It is a given fact that the best start-ups look for VCs that can plug them into broader ecosystems to provide additional leverage and extend their vision. This brings us to the main topic of this article. It starts with a recount of a pioneering trip last year by a delegation from PKF which together with Malta Enterprise visited the Massachusetts Institute of Technology (MIT) in Boston, USA to explore links to promote Malta as a potential business accelerator and/or Life Sciences hub for innovators, start-ups and entrepreneurs. It is no stranger to accolades, as it is rated the world’s best university in chemistry; economics; linguistics; materials sciences; nanotechnology and astronomy. It goes without saying that this impressive learning institution is the pride of the American intelligentsia and other advanced countries (such as Singapore and Israel) have

regularly invested in its development since the sixties to partake of its overflowing chalice of innovation and cutting-edge research.

Another interesting landmark is the Boston-based Cambridge Innovation Center (CIC). This houses more than 1000 companies in close to 50,000 square metres of premium office and co-working space across eight facilities, including its expansion in St Louis, Missouri, Miami, Rotterdam, Warsaw and Sydney. A number of high-profile companies know their baptism at CIC – including HubSpot, which now employs over 1,100 people, and raised $125 million through its IPO last year, and Greatpoint Energy, which several years ago announced a $1.25 billion deal to build reactors in China. Additionally, Android co-founder Rich Miner built his unique Google Android software. CIC also has a non-profit sister, the Venture Cafe Foundation (which provides a Forum for venture capitalists to scout and help fund new talent). What is so special about CIC? The answer is that as an innovation hub it succeeded to attract world class start-ups which proved very supportive for the US economy through the generation of premium jobs and its high value-added inventions. Now that the economy is on the mend and a modest surplus on the horizon excites us, we need to seriously plough back some of the fruits of our harvest into a proper ecosystem. Events such as Zest and others all point to the dire need of stakeholders to discuss and network with experts on formulating a concept for a future Centre of Excellence that can be funded by government, possibly in the new ITS campus spearheaded by Mimcol. In the near future, such a project (currently on the back burner) will be reinforced by the output of talents from Barts Medical school, MCAST, University, AUM and other colleges all acting in unison can give birth to a nexus of superior minds in the Med. It is not an easy journey as many countries want to emulate the commercial success of Boston, New York, Singapore, Tel Aviv and Silicon Valley (but found that success was elusive). An Innovation Centre partnered with CIC (among others) will shine a light to guide us along the shadowy tunnel at the end of which we can underpin GDP growth and improve our competitiveness level. Only then will Alice in Wonderland grace our shores with smiles and a cornucopia of riches.