US online retail and cloud computing giant Amazon said last week that it is reducing its workforce by 14,000 posts to streamline operations as it invests in artificial intelligence.
It said the reductions were a continuation of efforts "to get even stronger by further reducing bureaucracy, removing layers, and shifting resources to ensure we're investing in our biggest bets and what matters most to our customers' current and future needs". This could be an eye-opener for us particularly the public sector which due to future AI enhancements, any redundancies can be cushioned in a revised four-day week.
Our workforce statistics are impressive with low unemployment figures (circa 1,200) projecting the deficit to fall from 3.3% of GDP this year to 2.8% next year, below the EU's 3% threshold. Parents will receive a bumper tax cut starting from next year, in a major drive to address Malta's fertility woes.
When considering success in the financial market, we should not overlook the recent bond issues. A large one was that of Bank of Valletta. Recently it received regulatory approval from the Malta Financial Services Authority for the listing of an unsecured euro medium-term bond programme of a maximum amount of €325 million.
The first series and tranche under the programme comprises up to €100 million in 5% unsecured subordinated bonds, maturing between 2030 and 2035. This amount may be increased to a maximum of €125 million if demand is strong and the bank exercises its "over-allotment option". The bonds are being offered for subscription by the public. Is this a sign of a "cash"-rich market where bonds are usually over-subscribed? It begs a question - what is the medicine that cured the patient and how did the country recover so quickly when one recalls that 16 years ago the global economy dipped into recession.
Our strong growth since 2009 has been driven by several factors, primarily the more effective use of the labour market and the significant influx of third country nationals. Both male and female worker forces registered a substantial increase. It means there are more shoulders to the grinding wheel and less people at risk of poverty and social exclusion.
This is thanks to the smart implementation of active welfare measures (now vastly improved by 2026 budget set to benefit families with children). This success was attracted by our hitherto untarnished reputation as a business centre. One hopes that Castille will not be hindered by bureaucracy when introducing effective innovation powered by incentive legislation to attract more investment in the property sector.
Perhaps a shake-up in Finance Malta and Malta Enterprise will follow to inculcate a sense of "Yes we can" at a time when the Eurozone economy is set to face a slowdown. Research and development has long been the neglected area of our industrial landscape - receiving little more than lip service - despite its potential to unlock growth opportunities for start-ups. Malta can recover lost ground to qualify as a Med hub for disruptive technology, such as blockchain, robotics and AI.
Ideally government capitalises on the advantage of a nimble legislative process that we'll harness, can enable us to keep abreast of fast developments in the sector. The good news is that the Finance minister promised, in his budget speech, to substantially increase investment in innovation. It comes as no surprise that PKF thinks that its past efforts to attract a world class organisation in this field does not come a moment too soon. Alas, the dream of having an innovation and business accelerator centre of calibre will prove to be a true catalyst to anchor existing manufacturing community and attract new ones.
This roadmap is an ambitious one as European governments are in competition to attract international companies and start-ups, particularly in fintech. AI and blockchain technologies lie at the core of reshaping the innovation and start-up ecosystem, enabling it to compete more effectively in the digital era. It starts with a recount of a pioneering trip by a delegation from PKF that 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, inventors and entrepreneurs. It is interesting to note that the MIT is a private research university in Cambridge, Massachusetts founded in 1861 - built in response to the increasing industrialisation of the United States.
The uniqueness of MIT is in its appetite for problem solving, especially those intractable technical problems whose solutions make a tangible difference. Needless to say, that with its supportive campus environment it houses an incredible number of talented students and as part of its diversity and its intensely creative atmosphere, both the arts and science flourish in all their forms. It is no stranger to accolades - rated as 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) have regularly invested in its development since the 1960s to partake of its overflowing chalice of innovation and cutting-edge research. Another interesting landmark is the Boston-based Cambridge Innovation Centre (CIC). This houses more than 1,000 companies in close to 100,000 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 millions 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. Rich established Google's New England headquarters there. CIC also has a non-profit sister, the Venture Cafe Foundation (this provides a Forum for venture capitalists to scout and help fund new talent). It stands to reason that Malta needs to be diligent and look for higher value-added sectors which are sustained by indigenous research and development skills. This challenge looks us straight in the face. Simply put - we need to invest money where our mouth is.
George M. Mangion is a partner in PKF, an audit and business advisory firm