Our algorithmic venture into AI

Author: George Mangion
Published on Business Today 18th April 2019

It was Prime Minister Joseph Muscat, at a speech he gave last year at the Delta summit, who talked about a vision to regulate Artificial Intelligence (AI), the internet of things (IOT) in an all-encompassing regulatory framework.

In his mind set, Malta just about climbed the slippery slopes of blockchain, and is now in an adventurous mode to tackle the next mountain of AI.

Undoubtedly, a technology that USA tech giants pour billions of dollars annually into for research and development purposes.

It is an open secret that government is keen to be seen helping innovation and would like to see Malta becoming a jurisdiction that attracts talent from all over the world.

Artificial intelligence and robotics are two ‘overnight successes’ in advanced economies that have been decades in the making, and their intersection will soon change a multitude of industries.

The evolution of smarter AI and more versatile robotics has helped both technologies to push past repetitive tasks to take on adaptive and more intelligent applications. In the coming years, the result will be nothing short of a revolutionary paradigm shift.

AI technologies will continue disrupting beyond 2019 and become even more widely available due to affordable cloud computing and big data explosion.

The gargantuan task was taken on board by Silvio Schembri, Malta’s junior minister for the digital economy and innovation.

At a recent press conference in Singapore, he revealed the country’s plans for the government’s new task force in an ambitious mission to become one of the world’s leading AI nations.

How can Malta gain from the wave of popularity that is gripping the ubiquitous sector of robotics?

The answer is found in the impending age of smarter robotics. These will certainly have a profound impact on traditional manufacturing; for instance, our health sector will soon make use of robotics to allocate medicines to patients and assist in useful operations taking place in the operating theatre.

AI thrives best by combining large amounts of data sets with fast, iterative processing and intelligent algorithms. This allows the AI software to learn automatically from patterns or features in that vast data set.

It is trendy to read on latest AI topics in the mainstream news. It is no exaggeration that AI has become a catch-all media term that refers to any computer programme that automatically does something.

Many people make referrals to AI without actually knowing what it really means. There is often a public debate on whether it is an evil or a panacea for humanity. Put simply, one may explain that in Malta this technology will in the near future spearhead novelties in the manufacturing sectors and create interesting scenarios in areas of productivity, safety, service, transportation, land registration and police records.

More will be revealed in the near future, when driver-less cars will become fully functional and slowly enter into the mainstream.

Autonomously driven cars and drones are both forms of advanced robotics, and they will pave the way for more specialised services that will speed productivity. They will impact every area of our lives.

As was the case of the internet revolution, some of the originalities will happen in a gradual, evolutionary way; albeit some will happen in a sudden, revolutionary manner.

To delve deeper into the subject matter, one may mention that apart from AI there is its cousin – Machine Learning (ML), and its sibling – Deep Learning (DL).  One may actually think they are all of the same stable but in fact they are different.

AI and the Internet of Things (IOT) are inextricably intertwined, with several technological advances all converging at once to set the foundation for an AI and IoT paroxysm. AI involves machines that can perform tasks that are characteristic of human intelligence. Typically, it includes things like planning, understanding language, recognising objects and sounds, learning, and problem solving. It goes without saying that the learning process involves feeding huge amounts of data to the algorithm and allowing the algorithm to adjust itself and improve.

To give a simple example, machine learning has been used to make drastic improvements to computer vision (the ability of a machine to recognise an object in an image or video).  In order to achieve this, the process may involve gathering hundreds of thousands or even millions of pictures and then have humans tag them.

For example, the humans might tag pictures that have a cat in them versus those that do not. Then, the algorithm tries to build a model that can accurately tag a picture as containing a cat or not as well as a human. In its simplicity, one may then conclude that once the accuracy level is high enough, the machine has now “learned” what a cat looks like.

Deep learning processes are one of many approaches to machine learning. It was originally inspired by the structure and function of the brain, namely the interconnecting of many neurons.

PKF Malta has taken the initiative to launch a training lab called the The Bit-Pod concept. This is a meeting place for informal discussions among practitioners, engineers and IT enthusiasts to network where they can informally discuss topics on the cosmic subject of this technology.

This is a non-profit organisation, intended to help connect entrepreneurs (mainly start-ups) to people, programming engineers, and other enthusiasts across the AI, blockchain and robotic fields. Whether you are looking to connect, learn, share, or work, Bit-Pod offers a selection of opportunities to network with other start-ups helping you scale the slippery slopes of early stage development.

It is undoubtedly true, that in other countries such initiatives are automatically sponsored by government agencies. The champion is Israel, which habitually offers financial and logistical help to nurture growth among start-ups. Regardless, the private sector in Malta is ready to give its share to develop this ambitious niche that will place Malta among the front runners in technical innovation.

Mastering this objective helps Malta to fulfil its mission to establish a national artificial intelligence stratagem.  Do not miss booking your place at the tech crowd converging in Malta for the Innovation Summit to be held next month.

George Mangion

Author: George Mangion
Published on Business Today 18th April 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

The Reform of MFSA and Implementation of Vision 2021

Author: George Mangion
Published on Malta Chamber 1st April 2019

One welcomes the new financial crime compliance plan Vision 2021 announced by the Malta Financial Services Authority (MFSA). This move did not come a moment too soon. It is essential that the rules of doing business within the global financial system are not only well-written but also robustly enforced.

Over the two decades that the sector was piloted by Professor Joe Bannister as chairman at MFSA, he saw the financial sector grow from a modest size in 1994, to give birth to a reputable centre of international business. During Prof. Bannister’s watch, commentators lamented that MFSA’s autonomy from the strings at Castille was paper-thin, so it comes as no surprise that the International Monetary Fund (IMF) and other international organisations are now insisting on its operational independence.

The latest move to remove dead wood from the ranks by granting early retirement is noted, since challenges that are facing the incumbent CEO (previously the Chairman and CEO of the Malta Gaming Authority) are significant. The demise of private banks such as Nemea, Sata and Pilatus last year were the fruits of past decisions, but realistically, three bad apples in the barrel does not mean that the entire domicile is beyond redemption. One welcomes the latest IMF report which has been requested by the government, as it gives a very piercing analysis of the factors which attributed to the recent shortcomings in the banking sector. However, it complimented the superlative growth in the economy, in particular, the financial sector. This contributes 11 per cent to the gross value added and also accounts for more than 10 per cent of employment.

MFSA as a single regulator employs 320 professionals. This is no small team to oversee approximately 2,300 licensed entities but MFSA envisages the scope for regulation is growing and wishes to recruit another 160 trained staff in two years’ time. With the current shortage of local professionals, this can only mean enlisting foreign experts. In the wake of international pressure, MFSA now wishes to further tighten the screws by clamping down on potential incidents that lead to the path towards money laundering and terrorist financing. The new CEO wants to be seen as a colossus fighting the infidels that penetrated the fragile fortress, leaving in their wake a stigma of AML and terrorist financings decoys. He claims that Malta needs to grow responsibly and set standards which are in line or better than those of our peers in Europe. Stoically, he embraces technology and innovation, entering the fintech space with optimism and preparedness. This is all very grand, but it needs a higher subvention from Government, possibly reaching €12 million at one go. It is a fact that the annual surplus (circa €10 milllion) posted by the Registry of Companies has always helped fund operations at MFSA with the balance repatriated to Government. This can now be ploughed back to fund the above-mentioned reform.

So why is MFSA contemplating securing the extra funding needed for a transformation to be sourced out of an increase in fees-charged to the sectors and its practitioners? MFSA has long stopped financing promotion of the sector, rightly saying it cannot be seen compromising its impartiality. This is commendable, but then the sector has to be actively promoted to compete with other jurisdictions that are constantly fine-tuning their laws and financial concessions to lure blue chip companies. Practitioners, out of a sense of duty, do not think twice to dig deep into their pockets to tour the globe and promote the island. Together we can succeed to rebuild our ranking as a top-class domicile with the help of Vision 2021.

George Mangion

Author: George Mangion
Published on Malta Chamber 1st April 2019
Get in touch: info@pkfmalta.com | +356 21 493 041

Tax incentives and the future of the family stores

Author: George Mangion
Published on Malta Today, 5th October 2018

Last month the finance minister gratuitously paid a one-time tax refund to all workers and inter alia this helped generate a better cash flow for village retailers.

A quick review of VAT charged on restaurants in southern Europe shows how Greece five years ago reduced VAT on catering from 23% to 13% in a bid to aid small business, bolster the tourism sector and reduce tax evasion. The experiment worked and yielded good results for a two-year period with higher VAT declarations.

Due to austerity measures, the rate was reverted to 23% in 2015.  Similarly, we find how Spain and Italy charge 10% on restaurants and on the provision of meals and beverages to be consumed immediately, even if they are made after the recipient’s order, while the Netherlands charges 6% on restaurants (excluding alcoholic beverages), take away food; bars, cafes, and nightclubs. The trophy goes to Luxembourg as it charges the lowest rate of 3% on food and 17% on alcoholic beverages.

Needless to say, it is a jaw-dropping experience when we ask why Malta charges a full rate of 18% on restaurant business albeit a concessionary rate of 7% on hotel accommodation including combined all-inclusive food and drink packages.

Now that the tourism industry is firing on all cylinders and the economy is reporting a small surplus can we follow Greece’s bold experiment and drop the rate on restaurants to 13%? Some commentators disagree, saying that any marginal drop in tax will not feature in lower menu prices.

Why reduce the cost of eating out when more tax can be collected especially noting tourist arrivals are on an upward trajectory (although 80% of the increase book with AirBnB)?

They argue that if any reform is necessary to minimise under declarations of VAT, then a better solution is to stratify the VAT rate according to the type of restaurant – be it high class, medium and fast food category.

This may be another variant of the way the catering industry can be assisted in the next budget in order to regenerate itself and improve the national product. It may start affording to pay better staff salaries and refurbish its faded décor. Moving on to the retail sector one can also meet with a number of complaints from village shop owners.

These toil for long hours and face cost-cutting deals negotiated by mega stores which kill their unique advantage as they open all hours and provide a personal service to the community.

Open all hours” reminds us of a popular TV series written for the BBC about Arkwright a hard-working British shop owner lovingly played by the late Ronnie Barker in a comedy – a unique anthropological series. This TV series set in the seventies may not fully project a true picture of the sacrifices now faced by family retailers in a competitive market dominated with supermarkets – all offering cut-price products in modern fully air-conditioned stalls.

Then there is the curse of unbridled bureaucracy and the reality-check having savvy households increasing buying products ordered online. Banks are also getting risk averse and only lend against top collateral and prefer established businesses. In the run-up to last year’s general election, PN proclaimed that once elected to government it will create a business clinic – a one-stop-shop – to help self-employed persons who currently face untold difficulties to make ends meet.

It also promised to create an ‘Access Point’ within Pieta headquarters for self-employed persons to receive free advice on how to succeed getting access to soft loans, tips on how to be tax compliant, and other marketing ideas. PN also proposed the building of a ‘Data Bank’ –another novel idea.

Once elected, it visualised giving full access to PN clubs in towns and villages to serve as offices so that self-employed can get advice from mentors – a boon to help run their business. An idea was doing the rounds that PN aimed to encourage the growth of start-ups by suggesting a reduction in the next budget of the income tax rate paid by small businesses to 10% on the first €50,000 of operating profits.

With hindsight, one reminisces how seven years ago the mantra of helping SME’s was the hobby horse of Jason Azzopardi (the ex-minister in the PN administration responsible for piloting the Small Business Act – SBA in 2011). The SBA mirrors EU directives which is based on the Competitiveness Council policy on ‘Think Small First principle’. Historically it formed part of the ubiquitous Small Business Act for Europe (SBA) endorsed by the European Council in 2008. Sadly, SBA now rests silently in a library of dead letter legislation which is gathering dust on some nondescript shelf in a colonial building aka the Main Guard – facing the palace in St George Square, Valletta.

Theoretically, it targets the business category employing less than 250, i.e. the overwhelming majority of enterprises in Malta. No prize for guessing that it makes good economic sense to cater to SME’s rather than always accommodate the bigger fish in the pond.

There has been talk that developers risking millions in mega projects of luxury apartments and offices are the flavour of the month at Castille. Certainly, the resulting multiplier effect has created a sustained shortage of workers and pushed rents sky high. Is it true that developers, financiers, and top estate agents may be reaping millions while start-ups labour hard picking crumbs from the rich man’s table?

Readers may say this sounds like a battle cry extolling the plight of the less privileged who ache to see the fat cats tastefully lick their fingers at the banquet – asking for more.  Back to SBA – can we ignore its inimitability now that the economy is firing on all cylinders?

The act proposed the formation of a college of regulators expected to meet to harmonise laws and help remove overlapping rules and cut unnecessary bureaucracy. Sadly, during the past years, there have been few such meetings. Another SBA rule asserts that before any public sector entity introduces new burdens it is obliged to carry out a customer satisfaction survey with the aim to measure its impact.

It goes without saying that such surveys if and when conducted do not always result in mitigation measures.

In conclusion, last month the finance minister gratuitously paid a one-time tax refund to all workers and inter alia this helped generate a better cash flow for village retailers. The government may again rise to the occasion and magnanimously offer a helping hand by introducing a preferential small business tax.


George Mangion

Author: George Mangion
Published on Malta Today, 5th October 2018
Get in touch: info@pkfmalta.com | +356 21 493 041