Source: Mario Petrov¸ Management Graduate¸ PKFMalta¸ January 2013
With so much talk on energy proposals this week one can easily forget the hot topic of job creation and the strengthening of our local firms both working for domestic and export markets. In my study I have argued for the need for main political parties in Malta not to omit focusing some of their energies on assisting firms in tapping into larger and more profitable markets. Yes the problems for a minuscule market with so much internal competition makes the entrepreneur face insuperable odds and with a recession in Europe it looks like the available incentives ( micro credit and micro loans ) may not be enough to sustain growth. To spur more initiatives in micro and small firms sector in order to enter the International arena requires that they can deliver an innovative and impeccable product or service plus a strong brand promise that can compete with overseas blue chip companies. The latter companies attract teams of specialists which are also difficult to find in great quantities in Malta. So it is encouraging to read about a new scheme be set up by the ministry of finance for the promotion of clusters and network infrastructures. This aid will cover the initial expenses for the setting up of the group¸ such as renting of buildings¸ and development of e-tools. This scheme should help local businesses to take up the opportunity of the free European markets. One hopes that the scheme will not be riddled with too much red tape and unnecessary bureaucracy which in the past was so prevalent in the mentality of development agencies hell bent to catch the odd fraudster who may claim a few extra euro than the official entitlement. So what can be the advantages of clustering and why is this idea so useful in other developing countries not been previously exploited in Malta as is the case in Ireland and Portugal? The answer gives the defining of clustering –as companies collaborating profitably and synergising their respective strengths. Typically a cluster is facilitated by an economic development entity – usually a government entity – through funding and supportive schemes. Within the group of collaborating partners one also finds universities or other educational institutions that work closely with the industry to research and develop products and services as well as to align the educational programmes to meet the cluster’s skill requirements.
Clustering can be an optimal business model for the development of the Maltese industries which wish to venture into the export business but are too small to meet up with the necessary skills. It is not a panacea but it can be the start of a journey which if scrupulously followed will lead to fortune. It has worked so beautifully for local participants who teamed up to carry out mega projects in engineering and construction and medical sectors in Libya so why cannot it work for the rest of Europe? Clustering can be an opportunity for the indigenous micro and small firms to join up¸ even with other heavy-weight companies and strengthen their offering for the bigger markets and the more complex business ventures. It does however require a culture shift and a change in mind-sets ( particularly to liberate the close knit family clans of local businesses ) . As stated earlier¸ for some curious reason so far in the recent past it did not take place extensively in Malta. Certainly clustering goes beyond forming a consortium: it is developing products and services¸ and the next step that follows is joint innovation . As an example ¸