Factories are no longer threatened by an exorbitant service charge imposed by the government after the controversy was buried yesterday.
The manufacturing sector was shocked last year when Malta Enterprise, a government agency, announced it wanted to increase the service charge for its industrial estates.
At one point, the heads of three major exporting companies even warned that piling unrealistic costs on the manufacturing sector was pushing Malta down the rung of attractiveness when boards took decisions on investment.
But a memorandum of understanding – signed yesterday between Malta Industrial Parks, a subsidiary of Malta Enterprise that manages industrial estates, and the Malta Chamber of Commerce, Industry and Enterprise –has ended the controversy.
The agreement stipulates the basic level of maintenance and upkeep necessary but allows tenants to determine the service charge. Tenant associations will have to be formed for the individual industrial estates and they will be responsible for the upkeep of the zone.
In the absence of these associations, the government agency will be responsible for setting the charge.
Significantly, chamber president Tancred Tabone said the agreement was reached after “long and hard” negotiations and only after “the personal intervention of Finance Minister Tonio Fenech and Malta Industrial Parks chairperson Lawrence Zammit”.
He did not elaborate but sources indicated that the stumbling block to the agreement was former Malta Enterprise chairman Alan Camilleri, who was reluctant to budge from his position.
“Manufacturers were worried that they would be lumped with an exorbitant service charge that would simply go to fill Malta Enterprise’s coffers,” sources said.
Under the new framework the government will be responsible for capital investment in industrial estates and this cost will not form part of the service charge.
A second agreement signed yesterday dealt with factory rents. Rents will now increase by five per cent every five years instead of every three years.
Leases will be extended to 10 years for companies of strategic importance and five years for the rest.
The manufacturing sector provides 23,000 full-time jobs and 2,000 primary part-time jobs. It remains the single most important economic sector.