World Export Development Forum (WEDF)






 

Discussion brief for the Export Strategy-Maker

Internet and Efficiencies in Client Servicing and Market Promotion

The Malta experience, the challenge ahead

by Anton J. Said
Manager, Business Information & Technology Division
Malta External Trade Corporation
(Not edited by ITC)

santon@metco.u-net.com


In 1994, the Government of Malta commissioned a one-year project to draw up recommendations for the deployment of Information Technology (IT) on three principal fronts:

  • Business Opportunities & Development;

  • Telecommunications Infrastructure;

  • Education.

This study was entrusted to the Malta Council for Science and Technology and evolved into Malta's National Strategy for Information Technology. It identified IT as the necessary ingredient that Malta needed in its search for a new cycle of socio-economic growth and recommended ten strategic thrusts. At the top of the list stood the raison d'être of the IT strategy:

"to augment Malta's profile as an international broker of services and goods".

Gateway to the international marketplace

In Malta, trade promotion necessarily starts with creating visibility for the country. Due to its small size, foreign investors and potential commercial partners do not see or hear enough about Malta to appreciate its potential as a supplier of goods and services. Few people know that Malta manufactures and exports a broad spectrum of products ranging from sophisticated industrial equipment and semi-conductors to general consumer goods such as giftware and furniture, to management and financial services. Few know that Malta's export-per-capita ratio exceeds that of some of the most developed economies. The effort to firmly establish Malta on the world trade map therefore continues.

As the national trade promotion organization, the Malta External Trade Corporation (METCO) is the agency responsible for projecting Malta's image as a business partner. In doing so, METCO recognized the potential of the Internet as a promotional tool at an early stage. METCO Online was in fact officially launched in July 1995, before an Internet node was available in Malta. METCO was therefore instrumental in establishing Malta's presence on the Internet. For the first time, it was possible for foreign business entities to easily access online information about Malta, its business environment and support institutions, and about METCO and its services for the international business community.

Visibility for Maltese industry

During the same year METCO published its 'Made In Malta Directory' company register in its entirety on the Web. The database contains over 1,500 entries, each providing details of manufacturers, exporters and services companies, and is organized in 25 industry sectors. Products and firms are listed and categorized. Details for each firm include the address, fax and telephone numbers, e-mail and Web addresses, contact person and a list of products/services produced. Effectively, this initiative placed METCO as one of the first TSIs to provide a comprehensive register of exporters on the Web. This online business directory is still the most accessed resource on METCO Online and has often proved to be the gateway that links Maltese suppliers and overseas buyers for the first time.

Visibility for Maltese enterprises

METCO recognizes the need for an environment that encourages and empowers utilization of the Internet within the business community. Out of a registered user base of over 550 enterprises, only about 150 have a Web site. This is perceived as being too low, considering that Internet in Malta has been available for nearly five years and the ISP market is a highly competitive one. METCO has therefore taken the exposure it creates for Maltese exporters a step further by delivering a comprehensive Web-publishing service based on companies' specified needs. Firms can promote their exports by bringing product information to potential buyers via an online presence that already enjoys high visibility. The service includes design, hosting and updating of Web sites (usually comprising of a detailed profile, a visual and descriptive product/service catalogue and an online electronic form for buyer enquiries). Firms can now have their own domain name and their own e-mail address. The service thus aims to encourage firms to make use of the Internet as a promotional tool and to help them generate business leads. METCO maintains and hosts about fifty Web sites for which enterprises pay an annual fee. This helps METCO gauge whether firms still deem the service as a useful one.

Policy and strategy

National policy encourages the use of information technology since it is generally recognized as a motor for job creation, an instrument for economic growth, and a means for increased prosperity of the island. This position has been demonstrated by massive infusions of information systems within the public sector over the past decade, which have in turn resulted in a national culture of information technology. But this is not enough. Having the right legal framework is essential to promote electronic trade on a national scale, and to successfully embed it in routine business processes. The level of confidence by Maltese firms has so far been low since e-commerce (or e-trade) is deemed as being risky due to the fact that national legislation offers little by way of security or recognition for electronic transactions or contracts.

Two recent developments are intended to dispose of this latent cycle and to firmly establish Malta's place in the digital economy.

  • the reform and liberalization of the telecommunications sector;

  • the proposed establishment of a legislative framework for information practices.

In April 2000, the Government announced the reform and liberalization of the telecommunications sector. Malta already enjoys state-of-the-art digital telecommunications networks. The reform proposes a new regulatory regime that is expected to bring about new competition, new opportunities, new services. In fact, liberalization will end existing monopolies in fixed and mobile telephony, and in international gateway services. All other telecommunications services, including cable TV networks, have been liberalized.

In May, Government published a White Paper proposing a legislative framework for information practices that is expected to enable Malta's participation in the information society and position the country in the digital economy. It includes:

  • an Electronic Commerce Bill which establishes the legal basis for the safe but free conduct of electronic commerce;

  • a Data Protection Bill which safeguards citizens from the potential abuse of their personal data through information systems; and

  • a Computer Misuse Bill which protects the rights of the owners of valuable data and information systems.

The fundamental principle of the Electronic Commerce Bill is that electronic communications should not be discriminated against -- that there should be no disparity of treatment between electronic communications, electronic records or information in electronic form and paper communications, records or information. This therefore brings together the legal and commercial structures for business transactions whether carried out in the physical or virtual environments.

The Bill draws on a variety of sources, including the United Nations Commission on International Trade Law (UNCITRAL) Model Law on E-Commerce of 1996, the 'Electronic Signatures' and 'Electronic Commerce' directives of the European Union, as well as from the legislation of other jurisdictions, primarily Australia and Ireland.

These three Bills, when enacted, are expected not only to stimulate the use and development of electronic commerce by consumers and businesses alike, but also to position Malta as a leading hub for electronic commerce, and to extend a competitive edge in a fast-evolving global economy. Furthermore, they permit a quality leap in all government services as they establish a critical foundation for the attainment of e-Government.

A central element for future export development

The Maltese economy is going through radical changes. To an extent these changes are prompted by Malta's current negotiations with, and eventual accession to the European Union. Ultimately, however, adapting to the realities and the emergence of the global economy is unavoidable and the accession process may be perceived as an organized way of bringing about such change and of acclimatizing industry to the new rules of the game. Most indigenous Maltese industry (locally or foreign-owned enterprises conducting operations, including marketing, from Malta) has developed during the past four decades under relatively protective conditions and has traditionally been orientated towards the local market. This has rendered Maltese firms as relatively inexperienced operators in international trade.

Moreover, Maltese firms are characteristically small or micro enterprises that do not have the necessary resources to obtain information about opportunities in other markets. Whilst it is acknowledged that SMEs offer great potential to Malta's export development, most Maltese exporting SMEs rely on just a single foreign market and exports usually account for only a small percentage of total business turnover. In many cases, both domestic and international sales and marketing are the function of one person (often the owner of the business). Due to obvious constraints, traditional market research is given only minor importance and consequently is seldom undertaken. This maximizes the risks associated with international marketing efforts and minimizes the chances of successful outcomes.

Full market liberalization, harmonization of Malta's trade procedures with those of the EU, further adoption of international trade conventions, and the survival of Maltese firms in the digital economy mean that industry needs to restructure and internationalize in the shortest possible time. Given the extremely limited size of the domestic market, restructuring can only take place via export-led development that allows for the challenges and opportunities brought about by the digital economy.

Restructuring is not for industry only. METCO's operations and services are also being refined and intensified in order to assist Maltese firms cope with increased domestic and imported competition, and to further integrate Maltese enterprises in the global marketplace. In doing this, METCO has established Internet technology as one of the central elements for its internal efficiency and for export development. Substantial investment has been injected in the technological infrastructure to enable METCO to take advantage of the new electronic and telecommunications facilities available.

The specific needs of enterprises

The message that METCO wants to get across to Maltese enterprises underlying this programme is simple: "Internet Your Business". But is Maltese industry ready for the Internet revolution? METCO recently commissioned independent research consisting of ten focus group discussion meetings with randomly selected companies from various industry sectors. In essence, the findings revealed that more and more firms specifically expect METCO to deliver its services electronically. Feedback from enterprises identified:

  • a demand for faster, customized product- and market-specific information;

  • less willingness to physically visit METCO's Business Information Centre (trade library) to conduct basic secondary research;

  • less willingness to browse through printed business information prepared by METCO, such as market reports and newsletters and less printed promotional materials;

  • a demand for more timely notification of trade and investment opportunities;

  • a demand for more information on the realities of export potential and risks;

  • a single point of contact and access.

Rising to the challenge

METCO's role is not one at the policy-making level. Rather, it focuses on enabling the participation of enterprises, especially SMEs, in the digital economy by:

  • creating awareness;

  • stimulating and instigating utilization;

  • delivering value;

  • showcasing.

For the year 2000-2001, METCO has planned and is implementing a series of high-impact, incremental initiatives that provide immediate value individually, and long-term value collectively.

What METCO aims to achieve is a transformation in the way that Maltese firms prepare for and conduct international business, a paradigm shift that can:

  • encourage more firms to make increased use of ICTs in general, to make use of the Internet as a market research tool and as a promotional medium;

  • enhance the export capabilities of Maltese enterprises to achieve market diversification and economic integration;

  • enable industry to operate more effectively and competitively in international markets.

METCO is therefore in the process of realigning its strategy so that it is more adequately organized to:

  • provide basic but essential tools to build a national competitive advantage and aptitude by stimulating the use of Internet technologies by firms in their day-to-day operations;

  • exploit available business information resources and turn these into accessible and visible products thereby creating favourable conditions for Maltese firms to access business information, know-how, training and technology;

  • create convenient, and integrated systems to help promote Maltese products online;

  • pioneer and showcase e-commerce solutions and value-added Internet services as models for Maltese firms to use and follow;

  • bring Maltese enterprises together via an interconnectible and interoperable framework thereby significantly enhancing METCO's interface with clients.

The establishment of an extended intranet system linking Maltese firms to METCO is deemed to be a priority in the short term. This network extends several advantages to METCO and its clients:

  • it nurtures a culture towards internationalization and enhances the capabilities of Maltese companies in international trade;

  • it lowers the existing informational barriers;

  • it facilitates contacts between Maltese firms and foreign counterparts;

  • it enables more effective participation of Maltese firms in the digital economy;

  • it enhances the interface between METCO and the firms it aims to assist.

As with other Trade Support Institutions (TSIs), the Web is fast becoming METCO's principal tool for providing business and trade information when and where needed, for communicating with Maltese firms, for retrieving information about their needs, and for marketing its services.

The digital economy requires that all actors be equipped to participate successfully, that they are not constrained by significant handicaps, that they are able to operate within a single competitive framework. In this new environment, information and information processing are the prime assets. Those who are prepared for information distribution, transaction processing, information processing technologies, and information processing services will benefit from opportunities.

TSIs are therefore challenged. The competition for markets is intense, and this is made more severe as tools and media for the promotion of trade grow and become more easily accessible. There seems to be little doubt that information & communication technologies have an important impact on business competitiveness. Yet many SMEs still find it hard to realize business benefits from their investments in technology. The TSI is therefore uniquely positioned to demonstrate:

  • how information and communication technologies are relevant to the needs of industry;

  • which technologies can have a positive and supportive impact on businesses;

  • what exactly are the benefits of e-export, and what are the threats;

  • how existing technology can be better utilized and how it is being used by competitors;

  • what is affordable and easily implemented.

It is with this in view that METCO wants to bridge the gap, to help Maltese firms make more informed decisions, to benefit from new business opportunities, to find new buyers and suppliers, to become more efficient in dealing with existing and potential clients.

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  Posted 25 July 2000