The Accountant – Issue 1 of 2021 (MIA Publication)

The COVID-19 experience is radically transforming our interactions.

The brick and mortar idea was suddenly thrown out of the window and we have had to re-think the way we run our everyday lives, the way we interact, the way we learn, the way we teach, the way we work and the way we do business. Even payments saw a drastic change. Transactions have evolved from cash to plastic to totally digital. When closure of non-essential retail outlets was put in effect, the essentiality of online presence suddenly took the spotlight.

The latest official figures about ICT usage in households issued by the National Statistics Office show that, in 2020, there were almost 350,000 internet users aged 16-74 years, the equivalent of nine out of ten persons in this age group. More than 60 per cent of these purchased goods and/or services online during the three months immediately preceding the survey. 

In 2020, a high level of internet use was also registered among enterprises with 10 or more employees, across most of the economic activities. Since 2011, approximately 97 per cent of local enterprises have been using the internet. This is at par with EU27 levels where, every year since 2015, the share of enterprises using the internet was nearing saturation levels. More than a third of enterprises had a contracted download speed for fixed line internet connection of between 100 and 500 Mbit/s. This was the most commonly used connection speed.

Websites are one of the most basic e-business platforms. The majority of the enterprises surveyed by the NSO in 2020 (83 per cent) had a website. The most common features on company websites were the description of goods and services accompanied by price lists, and links or references to the enterprise’s social media profiles. Data from the same survey held in 2019 showed that more than 86 per cent of the enterprises using the internet also made use of social media, with social networks such as Facebook being the most popular ones. Other functionalities on company websites included personalised content for repeat visitors, online ordering/booking and tracking/status of orders placed.

Company websites were most prevalent among enterprises operating in the real estate, professional, administrative and other service activities sectors. These were followed by wholesale and retail trade (84 per cent) and accommodation and food service activities, and transport and communication (83 per cent). These three sectors also comprised the largest share of enterprises that conducted sales through e-commerce.

The ICT usage and e-Commerce in Enterprises Survey measures two types of e-Commerce: web-sales and Electronic Data Interchange (EDI)-type sales. The former are sales made through web shops, web forms on websites, or web applications. EDI-type sales are automated, computer-to-computer sales in an agreed/standard format which do not require the manual inputting of individual messages.

Enterprises’ sales through e-commerce has been on a steady increase since 2017. While in 2020 national e-commerce sales stood at 26 per cent, five percentage points higher than the EU27 average, the total turnover generated from e-commerce in Malta amounted to over €2 billion, an increase of more than six per cent over 2019.

At the other end of the spectrum, data from the ICT usage in households showed that, despite the high percentage of local internet users making online purchases, only 39 per cent opted to buy from local retailers. This is well below the EU27 level, which stood at 51 per cent. Most common purchases for local buyers were clothes, shoes or accessories, and deliveries from the catering industries (34 and 33 per cent, respectively). On the other hand, the least common was music as a streaming service or downloads (11 per cent).

The data collected also shows that cloud computing services met various business ICT needs. These services have seen a sharp increase in recent years. While in 2014 the local share of enterprises making use of cloud computing services stood at 14 per cent, in 2020 this jumped to 53 per cent.

At a national level cloud computing services were particularly popular among small and medium enterprises and, in fact, 86 per cent relied on them for email purposes, while 80 per cent used them for finance and accounting software.

Moreover, 74 per cent of enterprises made use of cloud computing for office software.

The advantages cloud computing offers include: cheaper and safer storage, advantageous prices for software sharing, and flexibility of work practices. The technology also allows for multiple access at any point in time, enabling real-time updates and collaboration efficiency. With the outbreak of COVID-19 and the need to switch to remote working, such features gave companies a forward impetus to adapt as quickly as possible to the new reality. It is therefore not surprising to find a significant amount of enterprises using cloud computing services for Finance and Accounting software applications.

Online presence was already important before the pandemic, but it has now become essential. A fully functional website that is also optimised for mobile phones is one of the pre-requisites, and enterprises also need to adapt to a changing workforce. Different businesses might need a different approach, but the digital age will keep redefining the elements of time, place and space.

Jennifer Mifsud is the Senior Communications Officer at the National Statistics Office.