Companies that were planning to open offices in a US$300 million (Dh1.1 billion) business park development being built by Tecom in Malta are holding back because of the instability in Libya and the wider region.
SmartCity Malta, which is focused on attracting information and communication technology and media companies, is an office park development similar to Internet City and Media City in Dubai, also developed by Tecom Investments.
SmartCity is a conglomerate promoted by Tecom, part of Dubai Holding, to develop and manage a global network of self-sustained business townships to foster the knowledge economy.
The first SmartCity Malta office block opened in October, but most of the park is still a construction site. The project is the largest job-creation initiative in the country, with 6,000 workers to be based there eventually, according to Tecom.
"There is some hesitation in terms of decision-making," said Fareed Abdulrahman, the chief executive of SmartCity. "Lots of companies have just put decisions on hold until they see how things go.
"A lot of companies cover Libya from Malta. Now there's no business at all. Everything has stopped. But when things come back they will continue doing business in Malta.
"I think most of those countries that have their decisions on hold, they are just waiting to see a little stability in Libya and other North African countries."
He said several business from Dubai Media City and Internet City had been considering setting up branches in Malta as their client base in the region grew, with the park being positioned as a strategic location to serve North Africa as well as parts of Europe.
"Suddenly, now things have changed since December."
The park, a joint venture with the government of Malta, is to include office blocks, apartments and villas, hotels, shops and an amphitheatre, based around an artificial lagoon. But the start of work on the residential units is likely to depend on an improvement in the Libyan situation.
"We are really going to have to look at this very carefully," said Mr Abdulrahman. "Things are not stable around Malta. The residential and the hotel hasn't been our priority. If things go well, we might start the residential this year."
The project is part of SmartCity's plans to expand globally. Its other project abroad is SmartCity Kochi in Kerala, India, which is under development.
Mr Abdulrahman said the company was looking at the possibility of another location in Europe as well a second in India.
"Also, we are very much looking at Asia-Pacific. We are not looking at China for the time being. But it will be an interesting location and especially for low-cost operations."
Malta came out ahead of competition from Greece, Cyprus and the south of France as SmartCity looked for a location abroad.
"Besides the geographical location, it does offer a lot of benefits for companies and in particular for companies coming to set up and looking for either a regional office or a branch," said Suleiman al Riyami, the business development manager at SmartCity Malta.
Operating costs were lower than in many other countries, and the government provided tax breaks, he said. The country's official language being English was also an important factor.
About a dozen companies had signed up so far, including Cisco and HP, and some were expected to start fitting out their offices in the next few weeks, he said.
"Obviously we had concerns when the issue broke out, in terms of the difficulties of Dubai Holding," said Tonio Fenech, Malta's minister of finance, economy and investment. "But clearly, they came out very committed to the project. The funding was already secured for the project."
Tecom also has a 60 per cent stake in the Malta telecoms operator Go.
Mr Abdulrahman remains optimistic about the project's long-term potential. "The way we see it, yes it will be slow for now, but we see it long-term. It will be very good for SmartCity."