Malta Introduction
Malta's
economic policy encourages information technology
operations, and the territory has invested
heavily in state-of-the-art telecommunications.
There are already a number of Internet Service
Providers in Malta, with clear interest
being shown in offshore e-commerce development.
The
most active e-commerce sector in Malta has
been betting and gaming; there are said
to be 20 betting and gaming e-commerce operations
in total on the island.
The
Malta Communications Authority announced
in March, 2002, that it intends to act as
a catalyst for e-commerce rather than a
regulator in the initial period of development.
Although e-commerce - together with telecommunications
and the country's postal service - is one
of the statutory areas under the competence
of the MCA, the Authority has revealed that
during the developmental stages of the sector,
its job will principally be to bring together
the main players, provide advice and assistance,
and explain the implications of new legislation
as and when it is implemented.
'Given the current embryonic stage of development
of this type of activity in Malta, we see
ourselves acting more as a catalyst in this
sector, rather than as a traditional regulator,'
said Celia Falzon, Project Manager for E-Commerce.
She added that: 'We will be disseminating
information, offering guidance and also
help with regards to the legal implications
of dealing and trading with foreign customers
or merchants. We will also work to keep
the public informed of their own rights
when it comes to transacting electronically.'
The
MCA administers Malta's Electronic Commerce
Act which came into force in mid-2002.
The
Privatisation Unit of Malta's Ministry for
Investment, Industry and Information Technology
announced in January, 2006, that it had
received binding offers for the sale of
shares held by the Government of Malta in
Maltacom plc. In May, 2006 Dubai Holding
LLC, which is the ultimate parent company
of Emirates International Telecommunications
Malta Ltd (EIT is a joint venture between
TECOM Investments and Dubai Investment Group),
acquired the Government of Malta’s
60 per cent controlling stake in Maltacom.
In
February, 2004, the latest e-Europe Progress
Report revealed that Malta is significantly
ahead of most EU accession countries in
terms of internet access and utilisation
of e-commerce. According to the report,
49% of Maltese homes are connected to the
internet, a figure that places the jurisdiction
top of the league amongst the ten accession
countries and three candidate countries
(Romania, Bulgaria and Turkey) studied in
the survey.
The island was ranked second place behind
Slovenia in terms of Personal Computer ownership,
with 58% of those polled claiming to own
a PC. The study also found that Malta has
70 secure internet servers per million inhabitants,
far higher than EU15 average of 48.
On the business front, the study found that
73% of Maltese firms had a website, also
the highest proportion amongst the accession
states. Of these, 20% had received orders
online, whilst a third of the respondents
reported that e-commerce generated over
1% of their revenues.
In April 2007 Maltacom, which owns the Maltanet
internet service provider, increased by
100% its download speed from 128Kbps to
256Kbps while the upload speed has also
been upgraded by 400%, from 64Kbps to 256Kbps.
In addition to upgrading the speed of its
entry-level Internet service speeds, Maltanet
has also announced that all 4 Mbps broadband
services have been upgraded as follows:
the 1 Gigabyte (GB) accounts are being upgraded
to 2GB, the 8GB accounts to 10GB, the 12GB
accounts to 16GB and the 20GB accounts to
30GB every month. All users were automatically
upgraded to the new monthly usage levels
at no extra cost.
In June 2007, Maltacom Group, was rebranded
and renamed GO in a move that reflects the
company's position as Malta’s sole
quadruple-play organisation covering fixed
voice, mobile, broadband Internet and digital
television.GO came to life replacing the
brands and respective logos of Maltacom,
Maltanet, Multiplus and go mobile. The company
has also announced three sub-brands under
the new GO banner – GO Plus, GO Business
and GO Mobile.
In August 2007, the Malta Communications
Authority (MCA) granted rights of use of
radio frequencies to 3G Telecommunications
Limited, for the establishment and operation
of a third generation (3G) mobile communications
network. This was completed in the case
of Vodafone and Go Mobile in August 2005.
See
below for specific information on e-commerce
in Malta, or go to Offshore-e-com.com
for an extensive analysis of the commercial
possibilities, legislation and taxation
of e-commerce.
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Malta
Facilities
ISP
and Hosting Services
The
main telecommunications provider is Maltacom
PLC and there are already ten or more ISPs
in Malta.
In
October, 2002, the Government signed an
agreement with Microsoft Corp under which
they
will together be exploring the possibility
of converting Malta into a regional hub
for information technology. The partnership
will see the development of various IT sectors
that will benefit including education, which
is critical to any society, incubation of
services built on Microsoft technology,
and a research academy to foster the development
of new software ventures in Malta.
“Having
Microsoft in Malta proves that the government’s
policy, for these last two years, is producing
the desired results and is managing to create
interest among the large companies. The
government intends to create a long-term
relationship with Microsoft,” said
Minister
for Justice and Local Councils, Dr Austin
Gatt.
“Together
with Microsoft, we have
had said. identified
three projects that will be implemented
immediately. Microsoft will be helping the
government to combat piracy by providing
their expertise and knowledge to law enforcing
people. Besides, campaigns will be launched
to make people aware of the need to respect
copyright,” he added.
The
second initiative, which is envisaged to
start operating by the first quarter of
next year, is a Microsoft IT academy in
Malta. This will offer courses in various
Microsoft technology and will lead to certifications
in various IT fields.
“Furthermore,
another three projects have been identified
for the long term. These are the creation
of an incubator in Malta through which knowledge
from Microsoft is transferred to the Maltese
industry to develop together services built
on Microsoft technology. This would be one
of the best initiatives the country could
obtain because it will provide the opportunity
to develop business process which could
be subsequently marketed abroad. Another
long-term initiative is integrating the
Maltese language on the Windows XP. Another
project that will be explored is the further
development of the dot net platform which
is used throughout the world for web development,”
said Dr Gatt.
In
June, 2004, the Maltese government signed
a more extensive strategic partnership deal
with Microsoft which will result in the
US-based software giant providing support
for the government’s new information technology
initiatives. The agreement was signed by
the Minister of Information Technology,
Austin Gatt and the chief executive officer
for Microsoft Europe, Middle East and Africa,
Jean Philippe Courtois and will last for
five years. The agreement ensures that Microsoft
will provide assistance in the implementation
of a number of initiatives in the field
of e-government, security and education.
Prime Minister Lawrence Gonzi observed that
it will help Malta promote itself as an
investment centre and spur economic growth.
The agreement will also secure government
departments favourable prices for software
licences, thus helping to ease public expenditure,
explained Dr Gatt.
"The
ICT sector in Malta is set to play a vital
role in building an export-oriented, knowledge-based
economy. The government welcomes every effort
that can drive ICT development forward and
Microsoft has been at the forefront of these
efforts," the IT Minster commented.
Meanwhile, Mr Courtois observed: "Still
in its first weeks as a member of the European
Union, Malta stands as an example to the
other EU accession states in its embrace
of the Lisbon Agenda's technology road map."
In
September 2007, the Prime Minister of Malta,
Lawrence Gonzi unveiled the masterplan for
SmartCity Malta, a new self-sustained industry
township for knowledge-based companies to
be developed by Tecom, owners of Dubai-based
SmartCity, in partnership with the Government
of Malta. SmartCity Malta, located in Ricasoli,
in the southern area of Malta’s Grand
Harbour, seeks to build a knowledge-based
industry cluster, primarily serving the
ICT and media sectors. The main component
of the masterplan is a commercial complex
that provides over 100,000 square metres
of intelligent office space. This complex
will form the core business infrastructure
for SmartCity Malta's knowledge-industry
community.
Over
30% of the land for SmartCity Malta will
be open to the public. This will feature
green boulevards and avenues, an amphitheatre,
a lagoon, a coastal route, and vista points
on the edge of a coastal cliff. There will
be three urban squares and a main shopping
parade. Also a small-scale conference centre,
as well as hotels, catering to the needs
of the business community and visitors to
the companies based there.
A
community centre will provide services such
as a crèche, health centre, library
and outdoor sports facilities such as tennis
courts, playgrounds and informal green spaces.
The masterplan also features a residential
complex. Around half of the residences will
be located in the vicinity of the main shopping
area, while the rest will consist of villas
and townhouses stretching along a coastal
footpath. Under the terms of the agreement,
the Government of Malta has agreed to make
available nearly 358,000 sq m of land to
develop the knowledge-based township.
SmartCity Malta will attract an investment
of at least US$300 million, making this
project the largest foreign investment initiative
in the ICT sector in Malta.
The project will provide a substantial boost
to Malta’s construction, hospitality,
maritime, services and retail sectors. At
today’s prices SmartCity Malta is
expected by 2014 to be making an annual
contribution of some EUR534 million (US$725
million) to Malta’s GDP. This makes
SmartCity Malta the single greatest new
contributor to Malta’s economy ever
to have been secured through foreign direct
investment.
SmartCity Malta is projected to generate
4% growth in the Maltese job market. According
to the government, over an eight year period,
SmartCity Malta will create 5,600 jobs with
the possibility of increasing to more than
7,000, apart from the several hundred jobs
created in the economy as a multiplier effect
of the project. In addition to new jobs
in Malta’s knowledge-industry, SmartCity
Malta will bring about new employment opportunities
in areas of administration, hospitality,
retail, maintenance, security and logistics
among others. The project is the largest
job-creator under one roof in Malta’s
history.
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Malta Applications
The government has a project to implement
an e-government system in the country within
the next few years. Amongst other features,
the e-government project is expected to
provide the facility to effect all payments
of taxes and licenses through an online
system with the use of credit cards.
In
early 2005, Malta's Parliamentary Secretary,
Tonio Fenech launched a new online tax return
submission system for individual taxpayers
in the jurisdiction.
According
to Mr Fenech, individuals will now be able
to submit their income tax forms online,
make any pending tax payments over the internet,
and view up to date information regarding
their Tax Statement and Tax Return Statement.
Meanwhile,
the e-Malta Commission had been officially
launched. Its main task is to educate the
Maltese population, commercial sector and
industry about the electronic revolution.
Malta has invested heavily in information
technology both at government level and
in the private sector over the last few
years.
The
Malta Financial Services Centre (MFSC) is
said to be considering a strategy to put
Malta on the map as one of Europe's major
online financial centres with the facility
to enable Malta to become the first dedicated
centre for electronic payments in the world.
The first measures that the MFSC proposes
involve steps to boost the economy and create
high quality employment for professionals.
There is a particular shortage of software
and IT support engineers and the MFSC has
highlighted the need for a 'digital strategy'
to double the country's current number of
graduates within the IT sector over the
next ten years and continue to develop its
online training programmes for school leavers
and the unemployed. According to the MFSC
the percentage of Maltese with degrees in
computer studies is a mere 2.1 per cent
compared to 5 per cent in the UK.
The
MFSC also explains that there are 'fundamental
problems' that must be tackled such as increasing
the university's small number of computer
laboratories - currently there are only
3 labs with 20 workstations each. It states:
'The organisational structure of the university
means that there is insufficient forward
planning of resources to meet the demands
of government economic initiatives.'
Reports in May, 2003, suggested that there
was growing interest from the United States
online gaming industy in setting up Maltese
based operations. Chairman of the Lotteries
and Gaming authority Alfred Muscat said
while no formal approaches had yet been
made by US gaming firms to his department,
he thought it would not be long before they
happened.
The
Malta Lotteries and Gaming Authority published
new regulations in April, 2004. An applicant
for an e-gaming license must be a limited
liability company registered in Malta and
with a physical presence in the jurisdiction,
and prospective licensees will be expected
to pass a ‘fit and proper’ persons test,
in addition to satisfying a number of other
regulations preventing fraud and money laundering.
In June, WorldMatch became the first firm
to gain an online gaming licence in Malta.
Describing itself as an “innovative concept”
in the online gaming industry, WorldMatch
will give the likes of casino operators,
airline companies, cruise liners and internet
portals access to the gaming sector without
any commitment in terms of management, technology,
finance or legal matters. The firm has so
far agreed six contracts. Alessandro Fried,
the general director of WorldMatch explained
at a press conference that Malta was chosen
as the company’s base due to its recent
accession to the European Union, and the
island’s strong legal framework
"Gaming
is a very delicate and sensitive business
which cannot but be treated with respect
and a high sense of ethics,” observed Mr
Fried. "Instead of closing their eyes to
the reality of gaming, in Malta they came
up with a serious piece of legislation,"
he added. The launch ceremony was attended
by senior members of the government including
Parliamentary Secretary Tonio Fenech and
the chairman of the Maltese Gaming Authority,
Joe Zammit Maempel.
In
September, 2005, Zeturf, a Malta-licensed
online gaming operator, said it would appeal
against the decision by a French court to
prevent it from offering gaming services
via the internet to the French market.
Zeturf offers its gaming services through
servers in Malta, but it was successfully
argued in court that a French company, Pari
Mutuel Urbain (PMU) has, since the 1930s,
enjoyed the exclusive right to organise
betting activities on horse races in France.
The case is of particular significance to
Malta, says George M. Mangion of PKF Malta.
Malta too had offered a seven-year monopoly
to a lottery operator, thus temporarily
preventing competitors from operating on
Maltese turf.
As a rule, EU member states operate an open
policy that shuns monopolies, but the rules
on freedom of services are complex and sometimes
tortuous. It all hinges on the individual
member state’s desire to protect its local
monopolies from unbridled competition.
Despite Zeturf's appeal, says Mr Mangion,
the court’s decision thus far may have serious
repercussions on other foreign online operators
involving in cross-border activities.
'In
line with the praxis of international jurisprudence,
once Zeturf is a Malta-registered company,
the execution of the decision meted by the
French courts must be acquiesced by a Maltese
court. But at this stage one may ask, is
it legal for a French citizen to place bets
on a foreign registered gaming website?
'Websites
offering paying bets are not licensed in
France. There are no licences for remote
gambling operations. Indeed, prohibitions
of online gambling are common in Europe.
In Norway, parliament has taken steps to
ban Norwegians from gambling online with
foreign companies. In a case in Italy last
year, the Italian Supreme Court ruled that
Italy's restrictive gambling policies were
consistent with its obligations under current
European Law. The court ruled that gaming
restrictions were justified to protect public
order.
'In
the Zeturf case in the French court it was
argued that the Malta based-bookmaker seemed
to be conducting its horse racing bets using
a PMU database. This led to the protest
by PMU on the alleged abuse of its intellectual
property and rights rather than on the prohibition
exercised by a state monopoly to inhibit
cross-border gambling services.
'In
its decision , the court took the view that
Zeturf by accepting online bets without
PMU prior authorisation had inflicted an
illicit disturbance to PMU.
'It
is curious to note that the French court
also ordered the Malta-based ISP to sever
the power supply to Zeturf. One may argue
that all things being equal the French court
has no jurisdiction over an ISP in another
country.
'The
case should ruffle a few feathers among
the lobbyists of the single market. It is
a moot point, whether the strategies being
employed by the French monopoly lay bare
a genuine desire to bring about a diminution
of gambling opportunities to protect its
citizens. However, in the light of recent
cases in Holland and Germany, it would seem
that a state which actively seeks to stimulate
demand for gambling products, would have
some difficulty justifying its national
gaming restrictions, were it called upon
to do so by the European Commission.
'Ewout
Keuleers, an attorney at Brussels who has
discussed the case, says that it is only
"a question of time" before the restrictions
to cross-border online gambling faced a
growing number of legal challenges. Indeed,
the European Court, in a November 2003 judgment
(the Gambelli case) stated, that public
interest considerations may justify limitations
on the free movement of services, providing
the objectives to be achieved were not disproportionate
to the restrictions imposed.
'
But the veil of hypocrisy ought to be lifted.
There is ample evidence that most of the
member states do not have as their central
objective the restriction of gambling opportunities
but the swelling of treasury coffers.
'The
developments in this case are very important
for Malta, an emerging online gaming centre
of repute. It may well be that the sweet
aroma of its success in attracting quality
operators has percolated in the taste buds
of other member states leaving a spasm of
envy. But that is the rule of the game.
It should be a level playing field where
states can compete for inward foreign investment
based on a well formulated and regulatory
regime.'
In
October, 2005, Betfair announced the launch
of its new operation in Malta, enabling
the pioneering firm to offer its peer to
peer poker games over the internet.
“Exchange
poker, our first product to be hosted here
in Malta, is already proving to be a great
success with our customers. We expect to
launch other games products from Malta in
the near future," stated Steve Ives, director
of Betfair Games.
By
August, 2007 letters of intent had been
issued to 76 companies, and 36 applications
to operate in Malta were still pending.
This is in addition to the 84 e-gaming companies
already licenced to operate from Malta.
The rush of applications from e-gaming firms
to register in Malta was prompted by the
UK government's announcement that only companies
based in territories on its so-called 'white
list' are able to market their services
in the UK from September 1, when the Gambling
Act 2005 came into force. It has been estimated
that this could effectively ban one thousand
firms from advertising in the UK.
To gain a place on the UK white list, countries
must meet stringent new standards which
are designed to stop children gambling,
protect vulnerable people, keep games fair
and keep out crime. Countries in the European
Economic Area (EEA), which includes Malta,
are automatically accepted, and so far,
the Isle of Man and Alderney are the only
non-EEA territories to have made the white
list.
Malta, it seems, is clearly a favoured jurisdiction.
The Lotteries and Gaming Authority issued
a statement informing all potential remote
gaming licensees that due to an unexpected
increase in the number of applications received
for new licences, the Authority was not
in a position to guarantee the processing
of new applications within the normal time-frames.
The
influx of e-gaming companies will also benefit
the government, which stands to raise substantial
revenue in taxation and license fees, Mario
Galea, chief executive of the Lotteries
Gaming Authority, told the Times. However,
he added that the real benefits won't be
felt in Malta until these firms actually
transfer their physical operations to the
island.
Malta Enterprise, the government body responsible
for promoting investment, trade and enterprise
development, showcased a handful of its
successful outsourcing companies at the
UK’s premier outsourcing event –
Outsource World – in May 2007, at
the Business Design Centre, London. Participating
in the event were:
