Economies and societies depend very much on their adaptability just like Darwin had asserted with respect to living organisms. To prosper and thrive in the long-run, economies need to evolve and remain future-proof by transforming themselves. Transformation is a necessary process but becomes even more critical in a post-crisis environment.
Over the years, Malta’s agility and nimbleness have been key determinants in transforming its economy. We are today a diversified economy with strong sectors which include maritime, aviation, financial services, remote gaming, life sciences and manufacturing.
As a country, we have developed robust and regulatory frameworks, innovative legislation, attractive incentive and support packages, invested in strong telecommunications and technology infrastructure and built an educational system that is capable of training the required human resource.
Although we have achieved a lot, complacency is not an option. Even more so given that all global economies have been paused and currently individual recovery plans are being drawn up making the need for transformation even more important.
As a country and economy, we need to embark on a transformation process that is wide-ranging and on various levels.
First, on an economic level, we need to continue focusing on further diversifying our economy. Although it is important for us to try and attract new economic sectors, we need to now focus much more on diversifying existing economic sectors. As a country, we need to explore and find niche industries within existing sectors.
For example, in financial services, we need to review our regulatory frameworks to start tapping into a more sustainable finance industry which has been exhibiting very fast growth on a global basis. It is therefore imperative that, on a national level, we embark on a sectoral and industry-transformation-mapping exercise which needs to identify and target new growth areas within existing sectors.
Second, business need to embark and embrace resilience-building practices within their organisation. COVID-19 has reaffirmed that we are living in a volatile, uncertain, complex and ambiguous environment and business leaders need to shore up organisational resilience to ensure that they have a risk-based approach to identify, assess and manage business risks and also having business continuity plans in place. Businesses need to be better prepared and need to ensure a level of reserves that acts as a buffer for unexpected events.
Third, we need to adopt a cluster and ecosystem mindset. Silo-thinking has been predominant. However, this crisis has shown us all how any economy is an intertwined web of actors, agents and different elements. For sectors and industries to thrive, we need to have well-functioning ecosystems whereby there are no broken links between market and institutional participants.
It is time that we develop brand Malta- JP Fabri
Therefore, focus needs to be given on ensuring that all elements within an ecosystem are aligned and able to support the respective sector. This includes the local talent pool, educational institutions, access to finance and banking among others.
Fourth, we need to transform the public sector and design it to deliver and to be digital to the core. Although this is part of a broader digital transformation, we need to ensure that before going digital, a deep business re-engineering process of government services and delivery of such services needs to be undertaken in order to reduce costs, increase efficiencies and start instilling a culture of excellence throughout the country.
Fifth, it is time that we develop brand Malta. Unfortunately, there is a lack of a coherent brand for the country. At a time when competitiveness between countries is going to be cut-throat, it is important that as a country we focus on our image, reputation and ways of promoting ourselves. The need for a unified brand which ties together all the elements including tourism, investment attractiveness, culture and lifestyle has never been so urgent.
Sixth, in order to transform the economy, we need to ensure that the fundamentals are working. Here, we need to thoroughly review and reassess our educational system as international studies such as PISA clearly show that Malta is not making progress in key areas including attainment, soft or critical skills and science-related subjects.
Access to banking and finance is another key area that needs to be addressed whereby Maltese SMEs are faced with higher interest rates when compared to their European peers.
Transformation is, I believe, one of the key pillars that any economic recovery and vision needs to embrace. The European Commission’s proposal for a pan-European recovery plan talks a lot about transformation too. It is a process that takes time, and that requires critical thinking, courage to reform and determination. More than 2,000 years ago, Heraclitus said that the only constant is change. Failure to transform ourselves continuously will be a threat to our own survival.
JP Fabri is a partner at Seed.