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Malta - RIO Country Report

RIO Country Report Malta 2015

The annual RIO Country Report offers an analysis of the R&I system in Malta, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Maltese research and innovation system and assesses the policy response.

R&I Challenges
Improving the quality of the science base
Challenge description: 

The Research Excellence Composite Indicator ranks Malta (23rd in EU28) markedly behind the leading EU Members States. Compared with similar size economies and neighouring countries, Malta is coping better, but is still lagging behind. The overall score of Malta increased, but starting from a very low base (17.73 in 2007 to 23.27 in 2012). Among the different components of the indicator, the highly cited publication and Patent Cooperation Treaty (PCT) patents decreased in 2012 compared to 2007, the top universities and PROs score remained the same and only the sum of European Research Council (ERC) grants increased. In terms of share of publications among the top 10% most highly cited Malta's performance fluctuated across years and the country (5.42% for 2000-2013) still lags considerably behind the similar size economies countries (LU – 9.68%, CY – 8.01%) and EU28 (10.55%).

Malta's latest investments in research infrastructures are supported through EU Structural Funds (2007-2013). While it is expected that these initiatives will continue during the next programming period, some delays could occur leading to a temporary dip in the developing of RIs. The investments were targeted mainly at UoM's laboratories and equipment and no large scale RIs are available in Malta.

Malta’s R&I system is relatively young and small, which is reflected in sub-critical mass. The level of R&D expenditure in the higher education sector in 2014 (0.27% of GDP) was low compared to the EU28 (0.47%), with most of the funding allocated to the University of Malta, the main research performer in the higher education sector. The funding allocated to government research bodies was even less (0.08% of GDP, EU28 0.25%), which is not surprising since the country has only one PRO, the Malta Aquaculture Research Centre and the area in which it operates was not identified as one of the thematic priorities in the former national R&I strategy in force until 2014.

Malta does not have any funding programmes targeted exclusively at academic research, funding for research projects is very limited, and there are few full-time researchers especially at the post-doctoral level. Malta has only 0.21 new doctoral graduates per thousand of population aged 25-34, compared to the EU average of 1.81, and ranks last on this indicator (Innovation Union Scoreboard 2015). In absolute terms the number of researchers is small, with only 891 FTE in 2014, which accounted for 0.46% of the total active population, compared to 0.73% in the EU.

Policy Response: 

The government, through the National R&I Strategy 2020, acknowledges the need to further strengthen the "knowledge base" and centres its efforts around three areas: investing in human capital; research infrastructures and capacity building for excellence in climate change adaptation.

Malta has set targets to be achieved by 2020 for both number of researchers and doctorate holders. A number of measures are in place to encourage more individuals to pursue studies in science and technology. A National Interactive Science Centre is being developed with the aim of encouraging more students to opt for science subjects at secondary school level. At post-secondary and tertiary level, the monthly stipend allocated by central government to students following science and technology subjects is higher than that awarded to students following  other subjects. In order to increase the number of individuals with a doctoral qualification, the Malta Government Scholarship Scheme (MGSS), Strategic Educational Pathways Scholarships (STEPS) and Endeavour scholarship schemes were introduced. An important development is the launch of the Reach High Post-doctoral Grant Scheme in May 2015.

Malta has implemented several investment projects related to research infrastructures, mainly research laboratories at the University of Malta. Other infrastructure initiatives, although not targeted primarily at the science base, would be expected to have a positive impact in this area. These include the Malta Life Sciences Park and Digital Hub infrastructures which support the health (pharmaceuticals) and ICT-themed R&D. The ERDF allocations in the Operational Programme 2014-2020 include significant funding for new infrasturcture initiatives.

Climate change adaptation was identified as a priority for capacity building in the National R&I Strategy 2020. There are initiatives and expertise in this area within the UoM (Climate Research Group), the Malta Resource Authority, The Malta Environment and Planning Authority and the Ministry for Sustainable Development, the Environment and Climate Change. Malta aims to consolidate it and build on these through the development of a centre of excellence on climate change. The Smart Specialisation Strategy outlines other areas of particular interest, where Malta will seek to build on existing and emerging capacity, e.g. tourism, maritime services, aviation and aerospace, health, resource-efficient buildings, high value-added manufacturing with a focus on processes and design, aquaculture and ICT as a cross-sectoral enabler.

Policy assessment: 

Malta has made great strides to address the issue with human capacity in R&I at all levels of education. The different scholarship schemes worked well in attracting more doctoral graduates, although the results have not yet been captured in the IUS indicators. The new post-doctoral grant scheme fills an important void in the funding system, although there is a danger that much of the funding will find its way  overseas rather than being used locally. The targets set in the HR area are very likely to be achieved even before 2020, although it must be remarked that these targets are much less ambitious than the target for GERD. The continuation of existing support measures is very important for the continued development of researcher talent.

Significant progress has also been made with regards to the improvement of the research infrastructures, and the recent upgrades to equipment in a number of university laboratories permit the undertaking of better-quality research. Newly built facilities are in line with the priorities identified in the National R&I Strategy and the S3. Although small in scale by international standards, the allocation of ERDF funding for further investment in RIs planned for the current programming period (2014-2020) should considerably improve the knowledge base in the long-term perspective.

In spite of these positive developments, however, funding for public and academic research activity remains very low. Such funding is necessary to provide research opportunities for the growing researcher pool, and to enable the exploitation of the significant investments made in research infrastructures in recent years.

Although the rolling R&I Action Plan containing concrete measures has not yet been officially adopted, preliminary indications point to a possible match between developing excellence and S3 identified areas in health, aquaculture and aerospace. It is important that Malta further develops capacity in the selected fields through establishing high-class infrastructures and networking activities.

Increasing R&I investment and output
Challenge description: 

Various composite indicators measuring R&I position Malta on different places in the European landscape.  The IUS ranking for 2015 positions Malta 18th in the EU28 and the Innovation Output Indicator 16th (2012).

In terms of input, Eurostat provisional data indicate that in 2014 Malta's gross domestic R&D expenditure (GERD) was 0.85% of GDP compared to 2.03% in the EU28. Most of it was performed by the business sector (0.51% of GDP compared to 1.30% of GDP in the EU28). In private enterprise, the sectors with the highest R&D expenditure in 2012 were computer programming and pharmaceuticals, which together accounted for 54% of BERD. The R&D expenditure increased over the last years, but while progress is clear, provisional 2014 data indicates that the increase may not continue in the same trend as in the previous years.

Capitalising on the investment in R&I through the development of marketable products and services presents another challenge for Malta. SMEs in particular could well be lacking the necessary skills, or the finance to buy in the required expertise. National funding for private R&D is one of the lowest in the EU, standing at just 0.01% of GDP compared to an EU average of 0.09% in 2012. The level of privately-funded public R&D expenditure in Malta is extremely low – in 2012 it was only 0.6% of the total GERD. Further to that, the European Council recommended that Malta takes action in 2015-2016 to improve small and micro-enterprises’ access to finance, in particular through non-bank instruments.

A number of indicators show that the innovative performance of Malta could further improve. Malta's patent performance is far below the EU average with only 0.22 PCT patent applications per billion GDP in current PPS against 3.78 in EU28 and licence and patent revenues from abroad are heavily shrinking (fallen from 0.78% of GDP in 2005 to 0.21% of GDP in 2012). The share of knowledge-intensive services export is 19.6% against 49.5% on average for the EU28.

Although there is an improvement in the economic effects in Malta compared to the last year, according to the Innovation Union Scoreboard 2015, performance over the last 8 years decreased for 9 Member States, in particular for Malta and Greece. Declining performance is observed in particular for License and patent revenues from abroad (-15%), Sales share of new innovations (-11%) and PCT patent applications (-8.6%).

Policy Response: 

The National R&I Strategy 2020 also addresses this structural weakness and highlights the need to create a comprehensive R&I support ecosystem. It aims to achieve this by tackling three areas: increasing the effectiveness of the delivery system, strengthening the capacity of entrepreneurial actors to innovate, and ensuring a seamless chain of support. The Smart Specialisation Strategy identifies areas in which innovation actors should focus their efforts, but no details on targets or financial commitment are clear yet. These are to be described in depth in the Action Plan, yet to be officially adopted.

In recent years various funding schemes and tax incentives were in place aiming to encourage private sector R&D (Fusion Technology Development Programme, R&D Grant Scheme, Innovation Actions Grant Scheme, R&D Feasibility Studies). These were complemented by fiscal and other measures aimed at commercialisation of research and promoting innovative startups (Fusion Commercialisation Programme, Takeoff Incubator and Seed Fund, Royalty income from Patents Scheme, JEREMIE). Novel initiatives implemented or underway in 2015 include the Business Start scheme, Venture Capital Malta, a crowdfunding platform and a Multilateral Trading Facility.

The University of Malta has in recent years introduced measures to facilitate commercialisation of research such as the setting up of the Knowledge Transfer Office in 2009, followed by the TAKEOFF Incubator in 2014, intended to support early stage technologies and knowledge/technology-based start-ups. In 2014, the Ministry for the Economy, Investment and Small Business (MEIB) in partnership with the University of Malta launched the TAKEOFF Seed Fund Award (TOSFA) to provide proof of concept funds to support commercialisation of University technologies and pre-seed funds to support early stage start-ups at TAKEOFF. A total of €100k were allocated both in 2014 and 2015. The Centre for Entrepreneurship and Business Incubation (CEBI) was officially set up at the University in the first quarter of 2013 to teach entrepreneurship to students across Faculties and to educate and support graduates in the creation of successful Knowledge-Based business ventures. Related initiatives include the MCAST Entrepreneurship Centre and the ICT Innovation Hub. The Life Sciences Park aims to encourage local start-ups as well as attracting FDI in the biomedical field.

In the NRP 2015, the government tasked the responsible bodies to address the issue with access to financial markets and developing venture capital funds. Malta Enterprise has recently launched a start-up scheme which assists beneficiaries from this programme through a a repayable assistance. Looking towards the future, the ERDF operational programme 2014-2020 specifies increased levels of funding dedicated to national infrastructure as well as to industry.

Policy assessment: 

There is clear evidence of a firm and sustained policy drive aimed at improving both R&I inputs and outputs in Malta. A broad set of measures are now in place and further novel initiatives were implemented in 2015. However, demand-side measures such as innovative procurement have not been availed of.

The effectiveness of most policy initiatives is not easy to assess rigorously due to the lack of data and formal evaluation studies. However, in terms of take-up, very successful initiatives include the Fusion Programme, the Innovation Actions Grant Scheme, JEREMIE, the Takeoff Business Incubator and Seed Fund. The ERDF R&D Grant Scheme enjoyed a lesser degree of success, and the original allocation was not fully taken up. Nevertheless most of the beneficiaries were SMEs and microenterprises and it should have a significant benefit on the R&I activities in the critical SME category.

On the other side, the indirect support to business was not properly evaluated but is considered to be able to trigger much more impact on R&I intensity in the future. The results based on modelling generated on the basis of the QUEST III model reveal that R&D tax incentives have the potential to heighten GERD to around 1% of GDP in 2020.

In spite of the significant improvents in the policy regime, however, levels of public funding for R&I remain very low compared to the rest of the EU. The Smart Specialisation Strategy identifies areas in which innovation actors are to focus their efforts, but no details on targets or financial commitment are clear yet. Allocation of ESIF funding to R&I for the 2014-2020 period is only 9% compared to an EU average of 12%.

Chapters
1. Overview of the R&I system

On account of Malta’s small size, the R&I governance system is highly centralised and there is no regional dimension. The governance system is simple and stable, with well-defined responsibilities and few changes to the relevant structures over the years. In the recent economic crisis Malta suffered less than many other countries.

Malta’s target is to achieve an R&D expenditure of 2% of GDP by 2020. GERD has been increasing steadily since 2009 and almost doubled in monetary terms over the next three years, reaching 0.86% of GDP (€61.7m) in 2012 before dropping marginally in percentage terms in 2013 and 2014. The increase was driven by increases in national funding as well as by the channeling of structural funds into R&I projects.

2. Recent developments in research and innovation policy and systems

Latest key developments in the R&I system included:

  • Operational Programme I (2014-2020) – Fostering a competitive and sustainable economy to meet our challenges - ERDF, Cohesion Fund, which was adopted in December 2014, was officially published in March 2015; Operational ProgrammeII (2014-2020) – Investing in human capital to create more opportunities and promote the wellbeing of society – ESF, was approved in March 2015.
  • National R&I Strategy 2020 was finally endorsed by the Government in February 2014, listing strategic areas for R&I support.
  • Launch of new support measures: the ‘Reach High’ postdoctoral research grant scheme (April 2015) funded through the European structural funds (ESF programme) and Endeavour Postgraduate Scholaship Scheme.
3. Public and private funding of R&I and expenditure

Government debt was on the increase from 2007 to 2013 but then levelled off and decreased slightly to 68% of GDP in 2014. The budget deficit decreased from 3.6% of GDP in 2012 to 2.1% in 2014. As a result of this positive development and the good economic outlook, the European Council lifted the excessive deficit procedures against Malta in June 2015.

The business enterprise sector is the largest R&D performer, with an expenditure of €40m (51% of GERD) in 2014. In the higher education sector, research expenditure was €21m (31% of GERD). R&D expenditure by government and public research organisations was 9% of GERD and is one of the lowest in the EU.

4. Quality of science base and priorities of the European Research Area

Malta’s National R&I Strategy is aligned with ERA priorities in broad terms, and work is currently underway on the development of an ERA roadmap. As a general rule, cross-border access to national grants is not possible, and researchers affiliated in foreign institutions are not eligible for funding from Maltese grant schemes. Portability of national grants abroad is not possible in most cases. The share of top 10% most cited publications fluctuated across the years, but still lags considerably behind the similar size economies and EU average.

5. Framework conditions for R&I and science-business cooperation

Recent years have seen the introduction of a broad range of supply-side measures to encourage business investment in research and innovation with different degrees of success. These include a number of funding schemes providing financing for research and innovation activity, business incubators and entrepreneurship centres, R&D rax incentives. Many of them target public-private cooperations. Demand-side measures are not actively used in Malta.

6. Conclusions

Malta is making progress in many R&I related areas but at the same time there are still remaining challenges. Possibly, there are some emerging issues, but there are also more comprehensive ones which need to be tackled as a priority and their solution would be beneficial to the overall R&I ecosystem. The two identified challenges put forward in the executive summary are summarised in the conclusions. The chapter lists relevant policy actions, assesses their appropriateness, efficiency and effectiveness.

Geo coverage
Report year
2015
Country Report file
Official publication date
Tuesday, 3 May, 2016
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