Peace of mind to Valletta’s businesses
When it comes to helping businesses grow, especially the small and micro, which make up the bulk and substance of our economy, no one can hold a candle to this Government.
I will not dwell here on the hugely popular MicroInvest and MicroCredit schemes, thanks to which more than 2,300 small businesses, most of which employing less than 10 people, are investing more than €91 million in the economy in less than two years and creating more than 700 new jobs. This Government has indeed made a good fist of helping both the cash flow of small businesses by easing tremendously access to finance and eliminating unnecessary bureaucracy.
What I would like to share with you are the benefits of the Valletta rental scheme we launched last month.
Businesses need security of title to prosper. Taking this as our guiding light, we took stock of all commercial lease agreements of Valletta’s business community. It resulted that out of about 500 shops being leased from the Land Department, more than 470 are on a six-monthly lease agreement, renewed annually. Almost all of them are precluded from subletting.
No wonder the legal gymnastics resorted to by a myriad of shop owners and lessees throughout the decades to disguise a subletting agreement with the veil of a management agreement, giving rise to countless, and costly, legal disputes in court. Apart from this, hundreds of shop owners had little incentive in investing to upgrade and those that did, did so at a considerable risk.
Furthermore, no bank in its right sense of mind lends to any business on a six-monthly lease agreement.
We held talks with the business community of Valletta and its representatives, especially the Chamber of Small and Medium Enterprises – GRTU and the Chamber of Commerce, Enterprise and Industry. We wanted to provide peace of mind and security of title to all those needing it. A meeting of minds immediately took place. We touched base with the leading commercial banks to gauge what period of time will be deemed sufficiently long to allow the banks to extend credit facilities.
The Land Department thus analysed and divided Valletta in four different zones for the purposes of such a scheme. Reasonable and fair rental rates were established, reflecting the zone in which the business was situated.
We launched the scheme on December 1. I must admit a particular sense of satisfaction seeing the fruit of our work being accepted, endorsed and commended by the GRTU, the Chamber of Commerce and the business communities of Republic and Merchants streets.
The Government is offering a 45-year lease, instead of a six-monthly one, a period sufficiently long for banks to lend to those shops wanting to upgrade.
Consumers will also benefit from a higher quality array of shops and brands.
The scheme is a voluntary one and open till December 2013, giving more than enough time to all interested lessees to make their own calculations.
Those opting to go for this scheme will be allowed to freely sublet and enter into management agreements, without having to worry about legal consequences, thus granting them much peace of mind. Retailers will now be able to collect a return on their investment from the goodwill generated from their outlets.
Judging by the feedback we are getting, it is a safe bet that it will be successful. I will recount a couple of anecdotes I came across visiting Valletta’s shops on Republic Day.
An elderly business person, who has been operating a shop in Republic Street for decades, confided in me that he can now look forward to retiring with the serenity of knowing that he can freely and legally sublet, doing everything above board.
Two other lessees, who will be partaking of this scheme, have already approached their banks to start preparing a radical overhaul of their business premises, one of them determined to invest more than €1.5 million and attracting to Republic Street a top notch foreign brand.
This will translate into more jobs being created. Just imagine if even a fraction of all those hundreds of Valletta businesses eligible to take up the scheme do carry out this type of investment. How many more jobs will be created and how much more elegant will our capital city businesses be, coupled with the beautiful regeneration and capital projects under way.
Eventually, this scheme will be extended to offer the same benefits and terms to all the other commercial lessees of government property in Malta and Gozo.
We certainly do have our imperfections but, surely, the experience of the last five years proves that this Government is the one with the necessary tools, brains and competence to allow our businesses to flourish.
I sincerely salute all our businesses. Indeed, small businesses contributed a significant portion of the 20,000 new jobs created in the last five years.
The Nationalist Party in government is indeed a safe pair of hands for our enterprising, hard working business community.
Jason Azzopardi is Minister for Fair Competition, Small Business and Consumers.