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A ‘logistical’ step forward

Changes are finally being made to the Business Promotion Act which will pave the way for logistics as a sector... and not a moment too late.

Transportation and advanced logistics were one of the seven sectors identified by the previous government in its Malta Vision 2015. Years ago, it was already obvious that the new activities flourishing in Malta would require infrastructural support.

Its inclusion was an important sign that although Malta was moving increasingly towards services, manufacturing was still an important sector – and that there were other hubbing activities which would be exploited.

The president of the Chartered Institute of Logistics and Transport, John Portelli, summarised the activity extremely well: It is about getting the right things to the right place at the right time and in the right condition ... at the right price.

Malta already has a strong transhipment presence for seafreight – with the Freeport acting as a giant open air warehouse for containers. But there is so much more that could be done, whether between forms of freight (sea/air, air/road and so on) or with bulk freight being brought here to be sorted out and dispatched to different locations, whether that freight happens to be retail products from China, halal foods from the Middle East or oil and gas supplies heading for Libya.

But the vision seems to have been myopic. A few aspects emerged which show how much more needed to be done to get this sector moving.

One was revealed in the Business Observer (May 22) when Economy Minister Chris Cardona said he wanted to change the law to enable Malta Industrial Parks (MIP) to allocate warehouse space. At the moment, MIP can only give space for productive capacity – and warehousing is seen as merely storage, rather than as a vital part of supply chain management.

What was also bizarre is that this sector was not covered by the Business Promotion Act as a qualifying activity for incentives. In fact, the Act specifically precludes this sort of distribution hub, although it is a qualifying activity for Malta Enterprise investment aid.

Incentives would attract new FDI, which has been sorely lacking in recent years. Certainly, action needs to be taken sooner rather than later. Medserv has already invested heavily in its warehousing in anticipation of work picking up in Libya and other sites. The airport is reportedly looking into creating a corridor linking it to the Freeport to enable international freight to move between them without having to go through customs. Freight companies are currently investing heavily in both trailers and warehousing to be able to handle this sort of freight. And the eventual allocation of the Marsa Shipbuilding site to operators could generate even more demand for space – which is sorely lacking.

Too much of the precious little space there is – and make no mistake, logistics requires vast amounts of space – is being occupied by companies that are no longer active or whose activity levels no longer merit the factory allocation. Getting rid of these operators is not easy, as cases all too often end up in Court, often merely as a delaying tactic.

After years of rhetoric, the time has come to get to grips with the obstacles that need to be removed to let this sector take off. Changing the Business Promotion Act on its own will not be enough.

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