‘We tend to underestimate the role of regulation when innovation is concerned’ – BOV CEO

Bank of Valletta plc (BOV) CEO Kenneth Farrugia has highlighted that in Malta, the role that regulation plays in innovation and technological development tends to be “underestimated”.

His comments came in a panel discussion during EY Malta’s Future Realised Conference, held on Wednesday at the Mediterranean Conference Centre. During the event, the results of the corporate service provider’s 19th Attractiveness Survey were presented.

The panel discussion, moderated by EY Malta and Cyprus Country Managing Partner Ronald Attard, included Mr Farrugia, together with MeDirect Bank CEO Arnaud Denis, Farsons Group CEO Norman Aquilina, HSBC Malta CEO Geoffrey Fichte, APS Bank CEO Marcel Cassar, as well as Malta Enterprise CEO Kurt Farrugia as panellists. The discussion’s aim was to gauge the general feeling of Malta’s business leaders about the survey’s results, together with what needs to be done in order to ensure a sustainable economic future.

The topic of innovation was widely discussed between the business leaders, particularly since the results showed that only 25 per cent of existing foreign direct investment (FDI) companies believe Malta is attractive in research and development (R&D) and innovation.

Commenting on this, Mr Farrugia said there needs to be gradual changes to Malta’s economic model, which will undoubtedly bring some growing pains that must be addressed.

“We tend to underestimate the role of regulation when innovation is concerned,” he remarked, pointing out that the new economic model has to be one that has a “strategic focus” on how regulation can “catalyse” innovation.

Indeed, regulation needs to consider the effect it has on innovation, as this can either encourage or completely stifle it. The relationship between regulation and innovation is dynamic, and a balance between the two is crucial.

Mr Farrugia stressed that innovation through regulation is “one of the key focus areas” for Malta’s economy.

“Technology will be an economic gamechanger,” he pointed out, describing it as the “saviour of economic downturns”.

“It is all about ensuring that you have the supporting ecosystems in place to support start-ups”, thus encouraging further innovation within the business space, he continued.

In this respect, Mr Farrugia concluded that a move to knowledge-based sectors also requires an upgrade in education as well as management of human capital.