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The Malta Logistics Hub – what happened to it?

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Back in July
2016, Dr Joseph Muscat had announced that a new logistics hub was planned at Ħal Far, which was set to be developed together
with the private sector, yet this was never done.

Initially, Dr Muscat was concerned on
giving even more land to Malta Freeport, which would only allow it to expand
its works even further, yet he then went on to acknowledge the fact that
logistics were, and still are, a very important part of the local economy.

The site in question was, and still
is, being used as a customs groupage complex. The proposal that was made
included an amount of space that was allocated to the existing groupage
operators.

In order to turn Malta into an
international logistics hub, thus making it one of the main pillars of our
economy, several discussions had to be made in detail. As a result of this, The
Malta Chamber of Commerce, Enterprise and Industry met with the Association of
Ship Agents as well as the Association of Groupage Operators on several occasions,
coming to the conclusion that the development of a co-ordinated and
well-planned national logistics strategy was needed prior to actually
developing the site.

Over the course of the rest of 2016
and 2017, the government went on to make an international call for proposals
for the concession of the design, construction, financing, operation, as well
as a maintenance centre of international logistics, all on 45,000 square metres
in Ħal Far.

The second request for proposals,
which was publicised on January 2017, had a slightly better result than the
first one, with the first one failing to get any sort of interest from local or
international companies. The second RFP managed to muster some interest.

However, the Ministry for the Economy
ended up initiating talks with the Association of Groupage Operators, after
there were no proposals submitted.

This came as no surprise since the
government did not listen to feedback from operators on why such a logistics
hub would not work, and why reissuing the exact same tender was practically
useless.

The operators that were actually
interested in the logistics hub were either operators that already had
warehouses in Ħal Far, or else operators that were desiring a warehouse there.

However, in order for potential investors
to actually invest in a project, they need to have transparency and be
well-informed on the matter, after all, their own resources are going into the
project, not someone else’s.

In an official statement to the press
on 7 April 2017, the Ministry announced that whilst there were nine
international companies that were interested in developing the hub, none of
them actually submitted a proposal to do so.

The opposition leader at the time,
Simon Busuttil, had stated that Malta Freeport was an excellent example of how
a logistics company could be successful and of how the industry was growing,
always being ready to provide an excellent service.

Through their report on the matter,
Ernst & Young stated that Malta needed some policy measures which could
attract tech talent from abroad to Malta, one way or another.

The strange part is that when Dr
Cardona was approached at a function just a few days after the RFP finished, he
insisted that there were bids for the development. This could have been down to
either Dr Cardona being misinformed on the matter, or else being unaware of
what was actually going on.

However, the latest development on the
matter was on 15 May 2017, and now, almost three years later, there have been
no updates on whether that site will be shifted into a logistics hub or not.

The site has
continued to function according to its original purpose, that of being a
customs groupage complex, and it seems to be as if nothing ever happened.

Unsurprisingly,
in the meantime an application for a 5,000 square metre logistics hub on ODZ
land in Żebbuġ was put forward at the end of June
2018, with there being only limited information on the application process.

Compared to
the 45,000 square metres of the one proposed in Ħal Far, this logistics hub seems tiny,
being made up of only 18 warehouses over two levels, some at basement level,
and others at street level. Apart from this, the application also contained
provision for an administration office, a parking facility, as well as
landscaped areas.

This will
come as no surprise, considering the amount of financial risk that investors
will be taking to develop the 5,000 square metre logistics hub will be much
lower than when taking the 45,000 square metres one.

This is the
case more than ever today, with banks opting to be extremely stringent on
lending money to businesses, thus making this process even harder for potential
investors.

Dr Muscat
notably attacked Malta’s two largest banks, BOV and HSBC, back in 2016, saying
that they hold between them “a duopoly in our banking system who are putting
the cart in front of the horse”.

At the start
of this year, Dr Muscat criticised banks that refused to open bank accounts for
foreign businesses, thus indirectly hindering growth and innovation. He said
that they had to be “agents for growth, not safety-deposit boxes”.

He also
added that that “While fully understanding and supporting de-risking efforts,
one cannot tolerate a situation where banks simply opt not to open accounts,
which I would say is against EU rules, simply to avoid taking any risk.”

In order for
such large projects to actually have stakeholders that are willing to invest in
them, banks have to find a way to change their loan schemes and let more
foreigners open accounts. Otherwise, such projects that are very beneficial to
the Maltese economy will end up being tossed aside, just like the one in Ħal Far.

The post The Malta Logistics Hub – what happened to it? appeared first on maltawinds.com.

Original article found on Malta Winds

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