The Malta Chamber last week announced the signing of two ‘landmark’ agreements with Malta Industrial Parks Ltd in the presence of the Minister of Finance, the Economy and Investment, Tonio Fenech.
Our agreement is an important achievement not only for our chamber but, more importantly, for the future of industry in Malta- Tancred Tabone
These memoranda of understanding deal with industrial rent and service charge policies.
The signing of the MoUs followed more than 12 months of difficult but cordial negotiations with the Government. Our starting positions were very far apart, especially when the authorities started to revise rents upwards and enforce the service charge policy in a manner that was not acceptable to us.
At this stage, we felt the need to call in our members and advised them against signing any renewal agreements until discussions with the authorities were concluded.
Further to this, we organised ourselves internally and sought to approach the matter professionally and from a position of knowledge. We undertook research and continued to discuss with the authorities.
From the final agreement reached it was clear that the Government was more than willing to listen to our concerns and has taken up all the measured suggestions that we, as a Chamber, put forward.
The striking of an agreement on such important matters is crucial for manufacturing – one of Malta’s main economic pillars.
Its competitiveness must not be overlooked if the country is to attract its fair share of investment in this area – both from local and foreign sources.
Manufacturing continues to generate in excess of 23,000 full-time jobs, which account for 16 per cent of the economy total, and a further 2,000 part-time primary jobs.
The average annual salary in industry stands at about €16,000 and is at par with the economy average.
Besides, manufacturing remains a key contributor to Malta’s balance of payments and investment.
The negotiations were long and difficult. As expected, the major bone of contention was to find agreement on the methodology for calculating both the rents and the service charge, which in industry are together termed as “occupancy costs”.
With respect to industrial rents, the new agreement is positive in that it establishes clear and objective criteria to determine the amount of rent for each tenant to pay.
This is important because it gives operators a considerable degree of certainty, which they constantly desire, without sacrificing flexibility.
On the issue of service charge, it has been agreed that the maintenance of industrial zones is to be entrusted to tenants’ associations.
The Malta Chamber has committed itself to support existing tenants’ associations as well as to actively assist in setting up new ones where they are needed.
In fact, we are assisting in the setting up of tenants’ associations for San Ġwann, Corradino and Marsa industrial zones.
The minimum standards for the upkeep of industrial estates were agreed upon with MIP that will, in turn, discuss these with each tenants’ Association. These associations may, from now on, determine whether any upgrades on these minimum standards are desired or required. Tenants shall now be empowered to decide what standard of industrial estate they want to operate in.
We also agreed that the service charge should be levied on a not-for-profit and full-cost recovery basis. It will only cover maintenance costs to be determined by the tenants’ associations. Capital costs will not be incorporated into the charge.
We firmly maintained that capital investment in industrial zones shall remain the responsibility of Government/MIP.
I feel that our agreement gives a clear yet flexible way forward. It is an important achievement not only for our chamber but, more importantly, for the future of industry in Malta.
We are proud to have brought this matter to a conclusion in a manner that we feel is right for the country and which safeguards the long-term sustainability of Malta’s manufacturing industry.
Tancred Tabone is the president of the Malta Chamber of Commerce, Enterprise and Industry.