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.