Last December Freeport Corporation CEO Aaron Farrugia told the Business Observer that the Freeport was already handling 3.1 million TEUs a year – worryingly close to its capacity of 3.5 million but that getting more space was clearly going to be controversial. He was right: the Prime Minister has now stated that he was against its expansion. Dr Farrugia told Vanessa Macdonald that the important thing was to look ahead to new opportunities.

The Freeport expansion has been ruled out. How does it affect its future plans?

Clearly, you have to take note of all political decisions and look forward – our remit is to maximise the use of the land available and that is what we are going to do.

The Freeport has a footprint and the corporation’s remit is to use it as efficiently as possible. That is what it will have to do in the future.

The operators have already reacted and are planning new systems and new investment – while also shifting their investments according to the international markets and their business plan – as they did in the past.

Every project proposed in Malta at the moment is being caught between those who lobby for development and those who lobby in favour of the environment –it has been this way since time immemorial. We somehow need to find a balance. I appreciate the country’s circumstances.

You said the Freeport needed more space. If it does not have that space can it cope with more turnover and bigger ships? Recently you had the largest container ship to visit Malta...

The investment throughout the years, both by the government and the private sector in the Freeport, together with our strategic location has resulted in Birżebbuġa ranking 12th among the top European ports and is the third largest transhipment and logistics centre in the Mediterranean region. We managed to attract mega-alliances and world leading shipping companies.  We are already geared up to receive the largest ships in the world. Land management through land use planning is now important more than ever to maximise existing land use.

The decision has not been welcomed – prompting the Malta Employers’ Association to say that the Freeport should not be turned into a political football.

It is not my remit to make political statements. However, if the government does one thing, environmentalists would criticise it and if it does another, it gets criticised by the other side. The space is what it is.

CEO Aaron FarrugiaCEO Aaron Farrugia

If the quay space cannot cope with bigger ships could we lose shipping lines?

That is not an issue. The corporation just spent $15 million on dredging it a year ago to 17m in depth, so we can cope with not only present ships but also the ones that will be built in the future.

They will not go to our competitors as there are two factors that make you an attractive port: the dwell time – how long it takes to unload or reload a ship – and the country’s security. And we rank highly on both.

The government has been talking about free trade zones for some time. What is happening?

A few weeks ago, the Prime Minister again spoke about a logistics hub and said the call for interest was a work in progress and also said it would be in Ħal Far.

Our vision as a Freeport Corporation was to have an international logistics hub and it is going to happen. The only difference is that we were anticipating an area closer to the Freeport. Ħal Far is also an ideal place between the airport and the Freeport.

I am very satisfied that this is happening. We have done a number of studies on free trade zones in various jurisdictions to see how they could work best.

The international logistics hub may or may not also be a free trade zone

Who would regulate the free trade zones: you or Malta Enterprise?

The Malta Freeport Act is being revised to the Malta Free Trade Zones Act. The aim is that any free trade zone in the country, wherever it is, would fall under an authority and we would take on that role as the Malta Free Trade Zones Authority.

Naturally, Malta Enterprise and Malta Industrial Parks will also have a strategic and administrative role to play – not least in attracting the right companies, both local and foreign.

If someone comes with a business proposal, it would be Malta Enterprise that has to vet it and Malta Industrial Parks which has to allocate appropriate space. What does the Freeport Corporation know about jobs created and value added?

I have looked at procedures in other jurisdictions like Dubai, Qatar, Oman and even places in Europe like Antwerp and Rotterdam. Malta Enterprise’s role is to get the investment to Malta and to offer incentives while MIP administers the factory space.

The international logistics hub may or may not also be a free trade zone. I would assume it will be, but it is by no means confirmed – that is in the government’s hands.

The hub could be developed by the private sector or as a public/private partnership but if it is designated as a free trade zone, then the corporation – as the authority – would administer and regulate the private operators who are allocated space. I do not see the roles as conflicting but as complementary.

What if the logistics hub is not a free trade zone? Is there another site that would be suitable?

Our role – through the new legislation – will be to advise the government on where these could be located. But so far, only the Ħal Far site has been identified, and only as a logistics hub.

What about the logistics policy?

That is in Malta Enterprise’s hands. Malta Freeport Corporation gave its input and advice. We were asked for information which we provided. You have to keep up to date with the mergers of shipping lines, what other ports are doing and where free trade zones are being created.

There are also other developments that you have to take into account, like what is going at with the Suez Canal area development and the impact of Brexit. Shipping lines will now need to consider the use of British ports once they are out of the EU and new legislation is in place.

Ablecare had said that oil companies would want a ‘free trade area’ at Marsa Shipbuilding so that they could bring equipment in and out without having to go through customs. Are there any plans to do that?

If there are, I am not aware of them. Obviously, the economic benefits of a free trade zone are enormous. These are political decisions. Take Mrieħel. That could also be an economic zone. Does it make sense for it to be a free trade zone?

And there are also other models: China has special economic zones, which are very similar. We could evaluate how these would fit into EU legislation.

I believe that the ‘blue economy’ is the way forward for our country. Malta was very successful in a number of sectors from pharmaceuticals to gaming and financial services. The blue economy is the next step. I am on the governance board of Malta Marittima which was set up to coordinate all the maritime activities.

The private sector is also involved through the Malta Maritime Forum. We are all on the same wavelength: seeking the creation of favourable economic conditions to the advantage of our country.

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