R&D : No trick, good treat!

Further to my article "R&D: Trick or treat" (November 13) the Chamber of Engineers greatly welcomes the incentives announced by the Prime Minister in the Budget speech with regards to Research and Development (R&D).

The current research expenditure tax deductible allowance of 150 per cent has now gone up to 200 per cent and the wider definition of R&D expenditure to also include property purchased for research activity purposes, should further encourage industry to truly invest in this very important and crucial activity, greatly needed by our economy. What is more, the introduction of incentives directed towards encouraging industry to engage high-end knowledge workers (i.e. those with a Masters or PhD) is now a reality. Not only are the salaries and the employers' NI share for such people tax deductible, even the money invested in the financing of Masters and/or PhD studies will also qualify as a tax deductible expense.

The Chamber of Engineers augurs that industry now genuinely reacts to these higher fiscal incentives by putting into place an HR strategy to increase the scientific and engineering knowledge base of their organisation, either by directly employing high-end knowledge workers or by encouraging specific employees to develop themselves into becoming such workers. It is only through the engagement of such workers that we will truly be able to ignite a passion and culture for R&D within Maltese industry.

While the government should be congratulated for putting further R&D fiscal incentives in place, one must not forget the supply side of this particular area of activity. We unfortunately are not producing enough high-end knowledge workers. We desperately need to have higher numbers of science, engineering and technology graduates further their studies and then utilise their knowledge to help transform industry into an energetic, innovative and efficient sector capable of attracting international attention and success. If such a supply is not forthcoming and if industry does not embrace R&D, we will face a very worrying situation of losing what little Maltese skill and knowledge we produce to foreign pastures, especially now that Malta is part of the European Union, where the mobility of workers is rather easy, especially within the high-end knowledge sector.

The Chamber of Engineers is also very glad to see that the government has once again addressed the issue of access to risk capital through the creation, over a three year period, of a new Lm900,000 Venture Capital Fund. Such a fund should help facilitate the access of small to medium enterprises to capital, thus enabling them to undertake a proper R&D effort which should definitely help increase their chances of commercialising their ideas, but a word of caution here is required. Let it be ensured that whichever entity is entrusted with the responsibility of managing such a fund, it must be well equipped and prepared to adopt an innovative, efficient, bureaucracy-free attitude in the way it functions and controls this fund. We cannot afford to have this new initiative fail. This fund must succeed. Our industry needs it.

Finally the chamber would like to comment on a very important imminent discussion regarding which public entity should be allocated the responsibility for R&D, should it be the Malta Council for Science and Technology, the University of Malta or Malta Enterprise? Although the chamber has its own thoughts on who should be chosen, our recommendation to the government is to entrust this into the hands of an entity capable of exhibiting real energy, clear determination and a focused approach to the complex and crucial activity of R&D.

What is required is a lean and mean, properly financed organisation, staffed with a small visionary multi-disciplinary team possessing the necessary commercial, scientific, co-ordination and communications skill mix. So let us use the right glue in bringing it all together and strong enough to see this important job through to the end.

The R&D challenge faced by industry is real and by no means easy, nevertheless we must always keep in mind the end goal, that of creating a vibrant, competitive, knowledge-based economy, which can truly contribute towards the further development of our nation. We owe this effort and commitment not only to our industry, or our economy, we owe it to the up-and-coming generations of Maltese who will undoubtedly live in an environment where knowledge, innovation and science will be key influencers of future societies.

Ing. Alexander Tranter is president of the Chamber of Engineers.