3 - 9 August 2000

'MDC should stand for Malta dot com'

by David Kelleher

Malta must stop insisting that it becomes a hub with everything evolving around it, Keith Fearne, managing director of Terranet Ltd, said yesterday. "We have consciously been emphasising on the word node; in a global economy where distance and size is of little importance, we should stop insisting that we are some sort of hub around which everything must revolve, but develop the idea that we are part of a larger network," Mr Fearne said.

Speaking at The Victoria Business Club at The Victoria Hotel, in dismissing the hub concept, Mr Fearne spoke on how the new technologies can impact on Malta's economy, creating jobs and wealth creation opportunities for the future. Over the last months, he said, Malta has seen a very noticeable rise in the debate on e-commerce. Three main conferences were organised on the topic and the media also took an interest in the subject to the effect that articles on e-commerce were carried nearly on a daily basis. "Internet based commerce is an ideal area for Malta to expand its economy towards. It requires no raw material, no importing or exporting of goods in and out of our Islands and very little space. The major requirement is human resources coming from a range of supporting service industries," Mr Fearne said.

He said that looking at the basic business proposition, the model is built around established international companies which are doing some transactions over the net, or companies being set-up specifically for Internet commerce, the dot coms. One example, he said, was amazon.com, whereby at the touch of a button you can purchase an item. This, he added, could be done also in Malta. "Once the transaction part of the business takes off it is logical to conclude that this will lead to spin offs. The IT service industry, software development, the telecoms and the banking industry are main areas which need to expand considerably in order to support these e-commerce set-ups," Mr Fearne said. He added: "The questions everybody asks is why would amazon.com want to do this in Malta? Our answer is 'Why not?'. The Internet has provided us with an ideal scenario where our traditional limitations do not offer the barriers to setting up which they may pose to other industries. In this industry it does not matter where the service is provided, how big Malta is, what track record we have. This is a new business area which moves at unbelievable speed, and who moves fastest gets the business."

Speaking at length on e-shore, Terranet's e-commerce subsidiary, Mr Fearne explained the concept behind the idea and the importance given to teaming up with others to provide such services. He said that the company was very confident that the model they are adopting works.

"There are a number of reasons why the model works. All over Europe resources are limited, so there are a lot of companies out there looking for somebody to provide them with the service they require. Malta is within two to four hours from the major European cities, we are within the same time zone, we speak English and Italian, do business very much within the European culture, have a good string of five-star hotels, pleasant weather and a competent work force," Mr Fearne said. He added that these were simple things, but passing the preliminary "comfortable to do business there" test was critical.

"The technological infrastructure, telecommunications network, the cheap labour cost which in the IT and service industry we have found to sometimes be 25 per cent of equivalent costs in Europe, cheap leasing of office space, high quality of work force and strong financial regulatory system," he added. "On top of all this Malta offers a set of fiscal incentives, under the ITC regime, which are extremely well positioned for attracting this sort of business to Malta. This is at the end a major selling proposition which seals the deal, and although in our marketing efforts this usually takes the back seat, in reality, when dealing on a one to one basis with our prospective clients, this is the most important issue," Mr Fearne said.

He said that the Internet and e-commerce was changing the way business was done and it was bringing down the strongest traditional corporate strong holds. "Malta has a chance to become a major player in this field. The opportunities are enormous and the stakes are extremely high; even bringing four to five major global corporations to set up their e-commerce operations here could have a direct impact on our economy. But we need to act fast, we need to take a lead, and our size and flexibility allows us to do so. We have a very small window and we need to go for it now," Mr Fearne said.