Malta: The Innovation Island
The Junior Minister for Financial Services, Digital Economy and Innovation, Silvio Schembri, sits down for an exclusive interview in Block magazine
Why has the government chosen to pursue a digital future for Malta?
If you look at the past four years we’ve been enjoying substantial economic growth, in order for the economy to be resilient to external shocks we have to continue to diversify and explore new niches to sustain our economic growth.
So for this reason we have delved into niche economic areas. We started 2 years ago with Blockchain and we’ve been attracting significant investment to our island, not only in terms of crypto but also in other areas of technological developments. Now we’re seeing new development in companies that are investing in technology and coming here to work and operate from Malta. We’re also seeing a spill-over effect, such as companies from the iGaming industry who are producing new products supported by blockchain technology.
Given that we’ve been the first country to go into this direction, I would say that such companies feel more comfortable working in Malta and expanding their operations since our framework is aimed at providing legal certainty. Therefore, instead of having a company operating in just the iGaming industry, these companies are now operating in ancillary activities, such as blockchain and AI.
Also central to the government’s vision is for the island to become a central hub for video game development and eSports…
In May we launched our strategy on video games development and eSports – we currently have about 12 companies operating, including one AAA, which is the highest level a company can reach. At the moment there are about 200 people employed
in the industry, which represents about 0.1% of our GDP, which is very minimal. The idea with this strategy is that within a period of 10 years this will increase to 1% of our GDP- attracting more people to work in video games development.
This continues to give more reasons to operators to continue to invest in Malta. The video games business model is structurally different from iGaming. Game developers need industry-led and sector-specific expertise and support to be able to grow. Hence, after discussion with key stakeholders we sought to take significant educational initiatives to sustain the existent talent pool, cater for the needs of the industry and make it easier for future generations to pursue a career in this thriving sector. The proactiveness of this government to look into new areas, embrace new technology and tread into unchartered territories where other countries hesitate to go, sends a significant message to companies in this sphere which are looking to operate from here.
We’ve also signed a MoU with one of the biggest eSports organisers – ESL and in October the first initiatives will be launched in Malta. By end November we will be in a position to issue first strategy in terms of initiatives such as educational programs, tax incentives, and schemes.
Is Malta’s infrastructure equipped to handle innovation-driven growth?
It’s a very valid concern, and it’s a reality. In Malta the population has increased significantly in a very short amount of time, it’s the highest population growth in Europe.
That is why two years ago we launched a program to change the physical infrastructure. We’ll be implementing a number of improvements, including widening of roads, as well as looking at other ideas, such as making deliveries through drones.
We’re investing in a new telecom cable between Malta and Gozo, which is being built as we speak and we have a tender for a cable between Malta and Marseille, with the possibility of investing in another cable between Libya and Malta – so that Malta can act as a connectivity hub between Europe and Africa.
In terms of digital infrastructure we’re seeking to continue strengthening this aspect. We have in fact launched our cybersecurity campaign and a new scheme for the private sector called B Secure, where private entities can apply for this fund and have their system checked by a private company free of charge, with an initial report provided to that company to show the loopholes and where they need to invest in order to protect against cyber attacks.
We can see a huge amount of investment in terms of tech advancement, such as that being done by the MFSA. The newly set up registry of companies, now known as the Malta Business Registry, will be fully operational on blockchain and AI by the end of this year. We have also set up a new promotional entity – Tech MT, which will promote all tech advancements and initiatives in the tech industry, from AI to blockchain and other emerging tech.
You mentioned the registry of companies which will be operational on the blockchain by the end of the year, are there plans to set up any more government services on the blockchain?
Yes, every registry is being analysed to be put on the blockchain. We have currently started by putting education certificates on the blockchain. Reformed rent laws will also require the registry of rents on the blockchain. By being registered using distributed ledger technologies, the contracts will be protected against tampering and only those authorised will have access to them. We plan to tackle Identity and health records, and tax next.
Will we have a national blockchain or will a different blockchain exist for each field?
This is something we’re still analysing. On a European level, the European commission has issued a tender to have a European platform, so depending on that result, we’ll analyse whether it’s more viable for us to ride on that platform or have our own platform. At the moment what we’re doing is building our own systems which can plug into other already public or private blockchains and eventually we can analyse whether to keep them that way or have a separate blockchain.
Although it’s early days yet – what is the government’s longterm vision for a space strategy?
We’re already in discussions with at least two European countries which have put a lot of investment into this area and we have already identified a very interesting project to be implemented here in Malta. Hopefully we will sign this agreement next month and that will take us into the movement of space activities. This year we launched the Space Task Force, which has the responsibility to devise a space strategy including a regulatory framework to regulate the arena. Here we’re not looking at the economical and research aspect of space, rather at things such as the registration of satellites, space mining, the registration of companies investing in space mining, and in terms of research from data used in satellites. That is the commercialisation aspect of space.
Let’s talk about AI and Malta’s national strategy – a public consultation on ethics guidelines was launched recently, what are the main objectives governing this?
The Malta Ethical AI framework was up for public consultation and was developed based on four objectives, namely; a human centric approach, respect for all the applicable laws and regulations, human rights, and democratic values, to maximise the benefits of AI systems while preventing and minimising risks, and finally to be aligned with emerging international standards and norms around AI ethics.
Having a framework on ethical and trustworthy AI is crucial as this will serve as guidance in the creation of trustworthy AI projects, but most importantly it will play a crucial part in instilling trust amongst the public. It is through these solid foundations, which will eventually lead us to the certification of AI-related projects. The Malta.AI Taskforce has been doing sterling work in drafting Malta’s National AI Strategy which is aimed at putting Malta amongst the 10 nations in the world to have a strategy likely to impact every sector we know today.
Towards the end of the year we’ll also make public the regulatory framework, to attract AI companies to Malta and to have internal operations operating on AI. This is also how we’re working in terms of digital structure – because it will continue to modernise how we provide services as a country, allowing us to be more avant-guard in this sphere.
Using IoT technology to optimise public services is also something the government has been investing heavily in, what projects do you have lined up?
I see IoT as a medium for bringing tech closer to the people. We’ve launched initiatives with Vodafone, having recently signed a MOU. Our first project was to implement intelligent bins, which communicate with the constructor when 70% full, alerting them if there’s a problem such as fire or flooding– this will increase efficiency and reduce people traffic.
There is also another project that is going to be implemented in Luqa for smart parking, where a free app would let parkers know where there is an empty parking space. This will then expand to other localities around Malta.
We believe our continued efforts in this sphere will cement Malta its earned nickname as the Blockchain Island. It will put us at the forefront of this digital transformation we have embarked upon, as well as a hub for innovation and creativity making Malta the ultimate jurisdiction of choice. The future is an exciting one and it is digital.
Read more articles like this by visiting the digital edition of Block Magazine.