The government – through the Privatisation Unit – has issued the request for proposals for an international logistics hub at Ħal Far, but the 45,000 square metre site is far more than just a new industrial estate.

The site has been chosen as a free trade zone or customs warehouse, and the intention is to use it as a logistics hub, buzz words that have peppered government’s vision statements for years.

Operators have been clamouring for two things. The first was the removal of the need to use the Customs groupage complex for imports arriving from an EU port, using the argument that freight would already have entered the EU at another border and that its ‘entry’ into Malta was therefore intra-EU and should not be subjected to  customs scrutiny as a matter of course.

It is not clear how having the groupage warehouses in a free trade zone or a customs warehouse area would affect that. Would it increase the paperwork for freight coming from EU ports, or make it easier?

There are already 34 operators using the complex and the government has assured them that nothing will change (although they will be given first preference) – which seems disappointing as things could certainly improve. They have clamoured for years to be able to invest the dilapidated area, without success. Perhaps the winning bidder would encourage such investment.

The second request was for warehouse space – but only if that could qualify for the preferential rates applied for factories and other productive investments. Operators over the past years have come up with myriad examples of how they would use that space if only it were available. The idea that ‘warehouses’ would be full of dusty inventory stored there for months is far from reality. If anything, it is the very speed of inventory turn-over which makes logistics so exciting. Take, for example, goods that are manufactured and shipped in bulk from Asia. These could be brought here to Malta, and broken down into consignments for different destinations. While here they could be labelled, re-packaged and assembled. There are various ways in which value could be added and jobs created.

Apart from space, the logistics hub had to be close to shipment nodes – the ports and the airport – and Ħal Far is certainly ideally located adjacent to the Freeport and the airport, although inconvenient for the Grand Harbour, given the lack of direct, traffic-free routes.

What choices did the government have? It could have used the normal channels of Malta Enterprise and Malta Industrial Parks to operate the site, but this would have dumped the financial burden on their shoulders – although it could ostensibly have used the Development Bank for this estimated €80 million infrastructural investment.

Instead it opted for a private sector option, although it is not clear whether the successful bidder will select tenants, and if so on what criteria. Will the operator be more transparent and offer better governance than MIP? Will it have more flexibility? And would the Free Trade Zone Corporation – which its CEO Aaron Farrugia said would be responsible for the zone – be an efficient and strict regulator?

And €80 million is a marvellous sounding headline but even over a 65-year period, is it feasible to recoup from logistics operators?

The request for proposals is a first step and no doubt, there will be considerable scrutiny of its 100-pages by stakeholders. It remains to be seen whether the government, after all this time, has got the elements right.