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Great Gonzi: Malta’s PM has agreed an IT deal that is expected to contribute 10% growth to the island’s GDP.

We escape the biting cold wind as the doors of the Prime Minister's office, which is also one of the oldest buildings in Valletta, shut behind us. I am asked to line up to greet the Prime Minister of Malta and Dr Lawrence Gonzi is just what you would expect a Prime Minister to be - he offers a firm handshake followed by a diplomatic smile.

Only the day before, an unusual event in Maltese politics occurred - every member of Parliament, including the government and the opposition voted unanimously to approve its Smart City project. For once, the two sides were in agreement. It is difficult to tell, but Gonzi seems pleased.

"It's looking good," he says, referring to Smart City. "We are hoping that within a few weeks we will start work on the site itself and we can see some development."

Things are looking good for Malta. Although it is a small island with a population below 500,000 and natural resources that are few to none, Malta has attracted a considerable amount of attention from foreign investors in Europe and the Middle East. Joining the European Union in May 2004 has cast more light on the island, but nothing has granted it such massive publicity as Dubai Technology, Electronic Commerce and Media Free Zone Authority's (TECOM) Smart City project. As Gonzi describes it: "This project has put Malta on the global map as an IT-oriented country."

He adds: "People are asking why Malta? How come, this Dubai model which has been so successful chose Malta of all the countries in Europe?"

What's more intriguing is the fact that Smart City will become the first internet city in Europe. Besides enormous job opportunities, the US$300m project will create 5600 guaranteed jobs in IT. This is expected to reach 10,000 when non IT-related positions are taken into consideration. A study indicates that it will contribute, in a conservative scenario, a 10% growth in GDP. Although those might be perceived as humble figures, as Gonzi puts it "for an economy like Malta these are fantastic numbers." He adds: "It is equivalent if you transpose the proportion to other countries like the UK, we would be talking about an enterprise employing about 300,000 people at once."

In addition to creating jobs, the project will bring in non-existing sectors that are IT and non IT-related. When completed in 2015, Smart City will present young graduates with career opportunities in specialised areas such as software and media.

Gonzi believes the Smart City deal is clear proof of the transformation of Malta's economy from "one that was in the past based on low-cost manufacturing industries into a modern technology-oriented economy based on knowledge and skills of all human resources".

Business in Malta started picking up after it joined the EU and when Gonzi was also appointed Prime Minister and Minister of finance. "I made a statement," says Gonzi, "I said Malta would target an entry into the Eurozone at the earliest possible date, which meant January 1, 2008. We started off with a deficit which was in the range of 10% of our GDP, national debt that was growing and had reached over 70% of our GDP."

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