Regional Recommendation Plan (Malta) Executive Summary

Regional Recommendation Plan (Malta) Executive Summary This recommendation paper is an outcome of an Interreg IVC programme Pooling4Clusters Project which aims to analyse and share best practices regarding the added value provided by the European Development Agencies partnering in the P4C Project, to become more efficient and boost their contribution to their respective regional clusters. MITA s overarching role in this project was to field test two best practices and based on the results achieved, draft a recommendation plan. Given the lack of local clustering activity, MITA opted to primarily explore the best practice Support Structures for cluster management and coordination. Moreover, because of the progressive nature of the other best practices, MITA conducted a series of Focus Groups with local industry players to discuss the pertinence of these best practices to the local context. The scope of this paper is to therefore propose a way forward to Policy makers for setting up of a clusters framework to help encourage locally based enterprises to migrate their operations towards higher value adding knowledge activities. Part 1 Cluster Policy Maltese Context One of the Smart Island Strategy targets was that of creating a national cluster framework together with industry leaders, educational institutions and research institutes that serve as a first class environment that allows for the development of specialised clusters. In parallel to the above, another clustering activity obligation, resides within the Malta IT Agency s (MITA) strategic coverage 63, were the Agency is responsible to engage with multiple stakeholders to devise a Clusters Framework primarily to help create the core competencies in an ICT cluster. Malta Enterprise (ME) has the legal remit to support and assist in the development of clusters through the Legal Notice issued under the Malta Enterprise Act dated 2009. Furthermore, ME issued a set of Incentive Guidelines accompanying the Legal Notice which will remain active until 31 st December, 2013. However, both the Legal Notice and the Incentive Guidelines may require modifications and improvements to conform to the strategic approach towards a well defined and practical clustering model. The Malta Council for Science and Technology (MCST) is focused on the importance of technology and the increasing need for inter-disciplinary competencies to tackle socio-economic priorities and opportunities, thus building a strong case for a continued investment in clusters. This is consistent with the EU s 7 th Framework Programme which emphasizes that innovation capacities of SMEs should be strengthened and that research driven clusters should be supported. The Research, Technology, Development and Innovation Committees of the Malta Chamber of Commerce, Enterprise and Industry (Malta Chamber) has emphasised in its position paper that enterprise collaboration would reduce the burden on individual enterprises to address international business demand. Government, educational institutions and existing business networks are strong facilitators for cluster initiation. Coordination of clusters is essential. The Malta Chamber has also emphasised this point in its position policy paper for the Commission on An Integrated Industrial Policy for the Globalisation Era

There are some sporadic good efforts in terms of incipient networking between entities within the same sector as well as with training providers and academic researchers; however these cannot be considered full-blow clusters. Some examples are presented hereunder: - In a collaborative approach between the Plastics sector and the Malta College for Science and Technology (MCAST), a vocational course was developed on plastic injection moulding techniques. Successful candidates will be awarded a diploma certificate as plastic injection technicians. This initiative was driven by the Malta Chamber. - eskills Alliance Malta was set up in October 2010 through a multi-stakeholder partnership led by MITA together with other public sector actors, business representative bodies and the private ICT sector. The Alliance serves as the collective voice and authoritative entity for all stakeholders to work together in achieving a better harmonisation between the demand and supply of ICT skills. - The MCST runs the R&I programme that involves an Academic and Industry partner/s in order to develop products or innovations in a number of focus areas namely: ICT, Biotech, value-added manufacturing and Environment. The programme funds the design of a product or process and its implementation in the industrial sectors. - A collaborative effort between MCAST and Lufthansa Technik took place with the aim of increasing aviation vocational skills and qualifications. MCAST, which became an accredited EASA Part-147 approved aircraft maintenance and servicing training organization started delivering the theoretical part of the training, whilst Lufthansa provided on the job training for the MCAST students. Malta is also investing in the hard infrastructures that are deemed necessary to house some of these clusters namely: The Smart City project in Ricasoli that is intended to focus on ICT and the Life Sciences Centre in San Gwann Industrial Estate that is intended to focus on Biotechnology and Life Sciences. Part 2 International Good Practices explored - National Cluster Support Programmes Clustering is a relatively new concept in Malta. The local industry players as well as Policy Makers have limited exposure in clustering. Cluster champions were chosen from the stakeholders to explore National Cluster Support Programmes as one of the best practices necessary to take clustering forward in Malta. The framework would then in itself also support other best practices identified in the P4C shortlist. MITA teamed up with two of the P4C partners namely the Tartu Science Park in Estonia and the Business Support Centre in Slovenia to organise study visits. These visits helped to identify the importance of having support structures in place for management and coordination of clusters. Both Estonia and Slovenia have set up a formal national Clusters Framework to provide applicants with financial support for cluster activities. For example in Estonia, the co-financing rate of support is that of 70% ERDF and 30% from the members. On the other hand the Slovenian Government stimulated clustering activities through financial support which included 80% direct Government funding for soft measures whilst the other 20% funded by the cluster s members. Prior to these financial structures, the Governments of both countries ran support schemes to identify and

train cluster managers, and even financially supported the formulation of cluster business plans required for the application of the above-mentioned financial support. From these study visits, it is clear that Support Structures will require the necessary dedicated funding, human resources, awareness campaigns, ongoing supportive expertise and development opportunities. All of these elements must be orchestrated in order for effective clustering to take place. In essence, the following pointers are seen as critical in the development of support structures for cluster development: - The need to conduct in-depth, on-the-ground research with existing or emerging sector-groupings to understand the dynamics of cluster development and collaborative governance in Malta; - The need of crafting a dedicated set of funding instruments for clustering and a sound governance structure; - Setting the parameters for the foundational funding instruments on the basis of an industry demandled policy; - Building and sustaining interest for clustering locally, through the identification of interested stakeholders and potential cluster managers on a continuous basis, encouraged to come together to reflect on the common aspects that could lead them to collaboration; - A wide level of buy-in from the industry and the public authorities on the policy and industry-led initiatives towards clustering; - Structures that support clusters that have objectives of growth, innovative projects, multi-sectoral collaboration and interest further internationalization of local products and services Methodology implemented to test the practice MITA organised study visits to gain practical exposure to the knowledge required for the development of clusters. The study visits allowed the champions to experience the development and growth of clusters from a hands-on practical approach including: - Exposure to relatively new cluster in both Estonia and Slovenia; - Shadow exposure to the Cluster Managers in both Estonia and Slovenia. The champions were walked through the development of the clusters, the daily operational processes and the main factors that allowed the cluster to become successful. - Exposure to Competence Centres with an incubation facilities; - Exposure to the Slovene and Estonian Cluster Policy development through a workshop with officials from both the Estonian Manager of the Cluster Development Programme and the Slovenian Ministry of Economic Development and Technology. Lessons Learnt As pointed out in the document, clustering activities in Malta are not yet formalised. The study visits allowed the champions to be exposed to different European national support structures, which play a critical role in the development and support to clusters. This showed that the setting up of support structures for management and coordination are critical towards a clustering policy in Malta.

Naturally, the support structures will be based on different country s needs. From this experience, the local champions concluded that the development of a support structure as a best practice is indeed transferable to the local industrial scenario. - Focus Groups on P4C s Best Practices Given the lack of clustering activity in Malta, and because of the progressive nature of the other best practices identified by the P4C members, MITA conducted a series of Focus Groups with local industry players to discuss the pertinence of these best practices to the local context. Through the Focus Groups, awareness was raised around the P4C fifteen identified best practices and how these influenced the running of clusters in Europe. The discussions then focused on how clustering should take place in Malta, and the type of support structures that should be in place to help instigate local companies to collaborate towards business growth. Methodology implemented to test the practice The purpose of these focus groups was to discuss and consult the findings and experiences garnered through the study visits and to identify components necessary for a local cluster framework. The feedback gathered from these activities has served as direct input to the formulation of the regional recommendation plan. The participants were contacted using the Malta Chamber, ME and MCST s contact database. In order to ensure effective discussions between participants, the focus groups size was kept between 8 14 participants and therefore, the invite was based on a first-come, first-serve basis. In order to ensure a professional setting of the Focus Group, and to allow for an efficient means of recording the findings, the service of a moderator and an assistant was sought. Lessons Learnt MITA together with the already named stakeholders organised six focus groups each pertaining to six diverse active sectors in the local economy, namely: the ICT sector, the Plastics sector, the Bio-technology and Health sector, the Pharmaceutical sector, the Aviation sector and the Waste management sector. - Structures support for management and coordination There was a general consensus by the focus groups on the need of establishing a national clusters framework. Some of the ME schemes e.g.: the SME Development Scheme which limits internationalisation initiatives exclusively to participation in fairs was deemed insufficient or too rigid by some sectors. This might explain the low take-up. This paper therefore, provides a recommendation towards the development of national support structures for cluster management and coordination. - Competence Centre The general structure of competence centres essentially involves the participation of academia and industrialists. However, it was observed that the focus groups participants failed to realise the advantages of the liaising with academic researchers for innovative product development. This could reflect the difficulties of the main public academic institution in reaching a critical mass of research, and the low research and development activities carried out by companies, hence leading to the lack of combined research commercialisation activities locally.

- Training and mentorship Efforts towards training and mentorship were expressed by all participants in the focus groups. In general, they regard training as an important contribution towards their business. Participants feel that the need for a more structured approach towards industry-based training should be spearheaded by Government in partnership with the industry and academia to ensure a solid educational pillar for clusters. - Help desk There seemed to be a general positive consensus towards having an information and assistance resource in place. Even though the effort of a similar service from ME (Business First) has been well received, the focus groups noted that a cluster Help Desk would be able to deliver much more for example in identifying new services to the cluster members; establish a cluster brand in the region; help members identify new market opportunities. - Collective booth at trade fairs / shows The discussion revolved mostly around the different types support towards trade fairs and shows. ME provides assistance to companies to participate in fairs as part of a Maltese contingent. The fact that ME s assistance is restricted to supporting only the businesses participation in fairs was felt by some of the participants of the focus group as a limitation. - Business intelligence / Advisory Service One of the success factors for clusters is to have a wellfunctioning network of companies and research institutions, where members know, respect and trust each other. This allows for easier collaboration between members. It seems that local companies pertaining to same or similar operating sectors are united by the factors that cause them the most problems, and seem to be keen to work jointly towards common goals. The concept of clusters in Malta is still at an embryonic stage. During this delicate stage of clustering policy crafting, the Focus Groups noted that the above mentioned best practices seem to be the most prevalent and viable out of the P4C s short-list of 15 best practices and are pertinent and transferable to Malta. Part 3: Recommendations for Malta As a result of the lessons learnt from the study visits and from discussions held locally with a number of focus groups, a 2-Pillar Clusters Framework is being proposed as follows: Pillar 1 Dedicated Funding for a Pro-Clustering Ecosystem 1. It is being proposed the need to allocate efforts towards the crafting of a dedicated set of funding instruments for clustering initiatives and a sound governance structure where the industry is actively contributing. This will in turn encourage the establishment of clear targets for the delivery of the local clusters framework and the corresponding funding programmes. Such funding instruments should be set on the basis of an industry-based approach; 2. It is being recommended that a set of pre-identified activities eligible under the funding instrument should be available for potential clusters to benefit from funding when working towards the following activities: - The recruitment of a cluster manager and a business development manager to facilitate clustering activities and generate business idea leading to project development; - Administration activities including: Office rent, stationary, costs related to the use of telecommunication etc;

- Cooperation activities including: initiation and coordination of cooperative projects between the cluster members and other R&D bodies including efforts towards joint product commercialisation particularly using Malta as a technology test-bed; - Shared Resource activities including: optimisation of resources, joint purchasing communities, commercialisation of products/processes, etc; - Training / HR activities including: seminars, trainings, academic, vocational and Industry-led professional certifications, organised company visits for cluster members, staff costs supporting the cluster; - Information and Communication activities including - staff company visits, newsletter, Online presence, CRM database, regular sectoral relevant publications, product brochures; - Internationalisation activities including: study trips abroad, provision of international contacts/business match-making, participation in international fairs, support for participation in international (research) projects; - Marketing & PR activities including: sectoral related PR, awards, fairs, conferences and seminars, joint activities/campaign to attract young people for the industry, cluster brand creation, advertising in-house solutions for the cluster members (use the platform of the cluster for specialised marketing); - R&I related activities including: Specific market / sectoral studies, studies and consultancy related to product launches, R&D related studies, surveys and financial experts for the drafting of project applications; 3. It is being proposed that continuous interest on the clusters phenomenon should be in place and nurtured. This can be done through the identification of interested stakeholders and potential cluster managers, encouraged to come together to reflect on the common aspects that could lead them to collaboration. It is being recommended further that the continuous organisation of awareness campaigns should also be in place leading to seminars, conference and workshops on the merits of clustering; Pillar 2 A Paradigm Shift: Instilling a collaborative and innovative culture through supportive expertise and development opportunities 1. A paradigm shift is necessary to overcome the current wary mentality of the local business sector towards collaboration with others from the same sector or companies that can enable innovation within that sector. It is therefore being recommended that ongoing focused training by clustering experts for local stakeholders and potential cluster managers interested to set-up or form part of clusters should take place. The training should be an action-oriented and case based learning including the organisation of study-visits to help participants gain practical exposure to the different strategic tools required for clusters development and growth; 2. It is being recommended that through this pillar, funds should be allocated towards a mechanism that instigates potential cluster formations and provides support for the initial drafting of potential cluster business plans. It is also recommended that each formation should consist of more than 2 members, and in order to push towards great innovation, it is suggested that a minimum of one member should be a technology provider.