SmartCity Malta
Geert Claes

Guest post: Can Malta become Europe's Silicon Island?

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This is a guest post by Geert Claes, a Business Improvement consultant, Information Architect, User Experience Designer and Business Analyst with extensive international experience. He’s lived and worked in Australia for most of the last 10 years but in August last year moved back to Europe to the tiny Mediterranean island of Malta.

If Europe is still looking for its Silicon Valley, Malta could well be it.

Malta is a little Mediterranean Island south of Italy, somewhere between Sicily and North Africa. The current Maltese IT scene is, as one might expect with a total population of about 410k, fairly small. Malta does have a healthy number of IT companies and Malta’s taxation system to attract foreign investment has also resulted in a more than average (unhealthy?) number of online gambling or iGaming companies.

However, SmartCity Malta is a €275 million business park that could truly make Malta a contestant to become a hub for European IT talent and tech start-ups. SmartCity Malta is a joint venture between the Maltese government and Dubai based TECOM Investments to construct a technology park with offices, hotels, apartments and even retail outlets. Why this rather big investment for this tiny island you wonder? Well, Malta does have some excellent drawing cards:

  • Member of the European Union, making it easy for any EU citizen to live and work in Malta;
  • Part of the Euro zone, eliminating currency conversion hassles for most EU citizens;
  • English is (next to Maltese) an official language;
  • Central European Time zone;
  • Regular direct flight connections to Europe, North Africa and the Middle East;
  • High speed Internet connections and excellent mobile phone coverage;
  • Mediterranean Climate;
  • Excellent health care system;
  • High standard of education;
  • Taxation encouraging foreign investment.

As with most things, Malta is not all sunshine and roses either. There are a number factors working against Malta too:

  • Small domestic economy, given the global aspect of ICT this may actually not be a real issue at all;
  • Small local talent pool: initiatives are underway to boost the local IT talent pool and it will not be that hard to convince people to move to Malta so this may not be a big issue either;
  • Electricity & Gas; Malta has no connections with the European power grid and no gas pipelines. Data centers and IT in general tend to prefer stable and cheap electricity. Malta often suffers from electricity blackouts, yet electricity is expensive because all power is generated using imported fossil fuels;
  • Water; half of the water supply depends on electrically powered desalination plants and the cost of electricity has a roll-on effect on drinking water as well;
  • Cars and roads; traffic in Malta is left-hand-drive, which by itself is not a problem at all, but it prevents buying (cheaper) cars from mainland Europe. The Maltese roads are also generally known to be in a very bad condition and Malta has a high number of car accidents;
  • Banking, opening a bank account and getting a personal loan in Malta as a non-Maltese citizen is known to be a huge PITA. Malta will need to make relocating to the island as smooth as possible;
  • Real Estate market is broken; the otherwise universal rule of supply-and-demand for housing simply doesn’t work in Malta. Malta has a massive oversupply of housing with a third of Malta’s residential dwellings permanently vacant, yet the cost of housing does not go down and is very high compared to the average wage (negative effect of the quality of life), mainly because there is no property tax.

SmartCity Malta recently made news headlines for the wrong reasons when they were accused of trying to pressure local Maltese IT companies to relocate to the new SmartCity Malta office buildings. It will be very hard though to convince local Maltese IT companies to relocate to an area that will remain a construction site for the next 11 years, at a much higher price compared to of their current office space cost without providing the promised added value of it being an IT technology hub.

A real IT technology hub is based around tech start-ups. SmartCity Malta is well underway to provide some nice office space, but creating a fertile ground for tech start-ups will be the hardest challenge. Founders of successful start-ups are smart people with innovative business ideas. Attracting these clever people will require angel investors and/or venture capitalists that are willing to invest in these ideas, because successful start-ups are a major contributor to job creation and overall success of a technology hub.

If SmartCity Malta really wants to promote itself as being a technology hub, they probably should actually have started by building SmartCity’s residential buildings rather than the office buildings. Tech start-ups don’t really need fancy office space, at least not to begin with. What SmartCity Malta really needs are people willing to invest in start-ups in Malta. SmartCity Malta and the Maltese government probably need to partner with angel investors and venture capitalists to attract these start-ups, so that they can use a part of the SmartCity Malta complex as their start-up “garage”. Attending and sponsoring European start-up events like Plugg, LeWeb, TechCrunch Europe’s GeeknRolla or the upcoming SnitzelConf would give Malta exposure to aspiring entrepreneurs and investors.

Looking at all the pros and cons, one has to agree that Malta really does have a lot going for it. Most (Northern) Europeans would simply love to be able to live on a sunny Mediterranean island and passionately work on their start-up idea. The big question is whether Malta will be able to attract tech start-up investors, because they are the one main missing ingredient for Malta to become Europe’s Silicon Valley.

Or perhaps that should be Silicon Island.

  • Jüri Kaljundi,

    So which are the coolest international Maltese startups?

    • Mark Agius

      There are a number of fast growing IT and software companies in Malta, and two spring to mind: Uniblue and GFI.

      These two companies have made local headlines over the past couple of years due to their excellent growth rates. Uniblue built new offices in 2008 and are often recruiting for new positions. GFI similarly are often advertising new opportunities.

    • Stefan Debattista

      There is and – Maltese founders

  • Jason Trost

    Malta is a great island to do business in. The betting arm of Smarkets is based in Valletta and our servers are in Marsa. The local culture is extremely business friendly and it’s a fantastic place to visit – for business or pleasure.

  • Empiricator

    Malta is an interesting place to do business. I know for a fact that they need more parking space! ;-) More importantly the Income Tax Act has been amended in June 2010 and there are important changes that may benefit individuals and corporations.

  • andraz

    I hope they can make it happen, but probably they wont. Compare it to barcelona, similar climate, most of the people speak english, mainland europe, great connections, big population, great infrastructure…

    • Empiricator

      Barcelona is great in terms of climate, food, nightlife, etc BUT:

      the cost of living is extremely high and spiraling out of control the value for money you get is ridiculously low. The cost of living in Malta is much lower w/ better quality of live and less crime (small crime in Barcelona is an absolute nightmare)

      The legal and taxation system in Spain is one of the Worst 50 in the world . It penalizes businesses from all angles and bureaucracy is a plague. Add to that the layers of bureaucracy from the Autonomous province-Catalunya. The legal and taxation system in Malta is simple, and very favourable for doing business. Anyone knows that Malta’s taxation is one of the best in Europe . Plus it is based on the British model which favours doing business unlike the Spanish based on traditional EU Roman law

      On top of that it is not true that everyone speaks English in Barcelona. The official language is Catalan not even Spanish. Most people don’t speak English. Business documentation has to be translated very often to 3 languages (English, Spanish and Catalan). In Malta English language is accepted as business language

      Those in the know are disbanding BCN and moving to places like Malta. Good luck doing business in Barcelona.

  • Joe Curmi

    By far, Keen Advertising is the cleanest (and coolest; just look at their portfolio on startup out there, right after the monopoly giants, Alert and ICON.

  • bcurdy

    Nice to see an article about Malta in TC Europe. Unfortunately, I still don’t see any real competitive advantages to start a company in Malta. You’re listing things that you can find in many other places: good weather, euro zone, an airport. I wish there would be more compelling arguments in favor of Malta. It doesn’t sound like a bad place but after reading your post, I think it might indeed be a tough challenge to attract companies on the island.

    Also, I believe you’re right to mention that investors are key to build an healthy ecosystem for startups. If you look at Boulder, Foundry Group and Techstars have put the city on the map. Not its time zone or its broadband providers.

    Altogether, no region in Europe will become anything like the Valley and in Malta’s case, even becoming an European technological hub seems to be a long shot. This being said “Those who say it’s impossible should not get in the way of those who are doing it.” So long live SmartCity Malta!

    • Geert

      There are not that many places in Europe with a nice Mediterranean climate where English is an official language :) Anyhow, from a commercial point of view the Maltese legal and tax system are major business advantages.

      • Stefan Debattista

        Yep.. have a look at this chart plotting English language in Europe:

      • Jeremy A.

        Well – that chart is somewhat misleading. HAving lived in both Malta and Sweden, I can tell you that while most people living in Sweden do know English, almost anything touching paperwork will be in Swedish (although it seems to be improving, especially in cities). In Malta, English is officially supported by the government, so it’s easier to do business in English than in Sweden.

        At least, that’s my take.

  • Stefan Debattista

    Great to see an article about Malta on TC! Smart city is a very cool idea – don’t bother comparing Malta with Spain or anywhere else – Malta IS unique (and a ***** fantastic place to live). I really do wish SmartCity comes through, there’s some great talent in Malta. Last I heard though.. smart city was not doing so well because Dubai itself is not doing well (and SmartCity is Dubai backed). But I really hope it happens as I’d move back in a heartbeat.

  • Stefan Debattista

    Here is the link to the smart city website: Geert are you involved with SmartCity? If not.. why not? :)

    • Geert

      Hi Stefan! I have a funny feeling that there is an assumption that providing nice offices and attracting some existing IT companies will be enough to create an IT hub, but I just don’t buy it.

      I wrote the article because I would really like to see SmartCity Malta succeed as well, but no, I am not involved with SmartCity Malta. As Paul Graham said in one of his essays: “to create a technology hub you only need two kinds of people: rich people and nerds”, in Malta’s case these nerds could come from Malta or anywhere else for that matter, the rich people is the missing piece in the puzzle …. unless SmartCity Malta is planning to play the role of startup investor as well, but I am not aware of any such plans.

      • Stefan Debattista

        MMMMMmmm and what about he 5% personal tax for directors?

      • Stefan Debattista


      • Stefan Debattista

        Maybe this calls for a TechHub branch in Malta then :) Mike?

  • Tim [techfruit]

    I would love Malta to become a tech hub in Europe and you make some good points, but surely the high possibility of electricity blackouts kind of nullifies everything else?

    I would think they would need to fix that before any startup would think of moving there from London/Paris/Barcelona/etc

    • Stefan Debattista

      True, blackouts are quite common in Malta, but offshore (virtual) servers are an alternative too. Our dev team is in Prague but our servers are in London. Malta houses many gaming companies as I’m sure you know, but they have not been put off by this (maybe just a bit frustrated). Hopefully the grid in Malta will improve.

  • Find phone number owner

    Malta is really an awesome place, if you wanna do business

  • fm

    This is a gag, right… Have you lost the run of yourself?

  • Johann Montfort

    Well as a Malteser I would love to see Smart City one day, cause it will boost the economy of the island. However, I cannot imagine Malta being the valley of Europe. Its a very small island and in my opinion already heavily populated and heavily built. So a project of this proportion will increase the congestion of people and traffic, and people who have lived in huge spaces before will find it very difficult to adapt to living on the island.

  • Farley

    Organized a conference in Malta a few years ago and was impressed with the potential. It should not be too hard to entice young developers to go there for a few years. But it might be difficult to get Execs to move out there for the longer haul. I wish the SmartCity project the best of luck!

  • John Falzon

    Thanks Joe Curmi for your comments. Hope to hear more as these comments as we are a small company from Gozo with a small heart and large passion. As you can see from our portfolio we work for all over the world.Thanks

  • mark

    Very interesting article. Of course, one thing was neglected that makes Malta all the more interesting for foreign tech companies to invest here; the substantially lower wages the Malese are paid, in comparison to our European counterparts.

  • Carla

    Malta is definitely the place to come for foreign companies to set up… the benefits and low taxes are GREAT. The sun is also a huge draw card.

    Companies setting up here can get a great deal on local gradutes and even post graduate students, who you can pay a pittance and work like dogs.

    Developers and Marketing staff all going for apx €15/h Malta is definitely a BARGAIN location.

  • Karl

    The infrastructure needs a lot of work before it can sustain a real business hub. Power and networks aside, transport facilities are still weak.

    With regards to local talent; there’s plenty (relative to the size of the population), though there’s a rather flippant attitude to planning and quality assurance which is almost a cultural feature.

  • Is Malta becoming Silicon Valley or India?

    […] Claes, a Belgian guy who works in Malta and has a wealth of experience in the online world wrote this article on The article is about the advantages and disadvantages of investing in Malta. It’s an […]

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  • Jan Paricka

    Bollocks. I’m in Malta, there’s nothing in there.

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