INTERVIEW | Karl Azzopardi: Industry’s landlord anticipating the needs of tomorrow

Malta Industrial Parks Ltd works in close collaboration with Malta Enterprise in order to support investment, whether it is new projects or the expansion of operations that are already based in Malta, acting as the landlord that provides the industrial space on behalf of government. BusinessToday spoke to MIP CEO KARL AZZOPARDI on the agency’s role and how he thinks COVID-19 will change industry practices

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What support does Malta Industrial Parks offer for new economic projects, or existing operations looking for an expansion, in terms of finding factory and industrial space?

Malta Industrial Parks Ltd (MIP) works in close collaboration with Malta Enterprise in order to support investment, whether it is new projects or the expansion of operations that are already based in Malta. While they provide the schemes and support measures, we act as the landlord that provides the industrial space on behalf of government.

Applications are submitted to Malta Enterprise and, following their evaluation, any approved projects are passed on the MIP for the land allocation.

Our involvement, however, commences at the enquiry stage, when we provide technical advice on the investors’ specific spatial requirements. Among others, this may include information such as development costs, sustainable building technologies available on the island, utility service costs, connections, and any other related information.

Once the project is approved and the letter of intent is signed, we start off a mix and match process that eventually leads to the identification and allocation of the industrial space. In most cases, investors would prefer space that is already built-up as it means they can hit the ground running sooner. However, in the circumstances of the current shortage within built-up factories, at the moment the predominant support is taking the form of land for development.

We maintain a continuous relationship with our tenants during the entire life cycle of their tenure, assisting in the upkeep of the properties as may be necessary as well as addressing any issues they may be facing, including in the common areas of the industrial estates which fall under our responsibility.

Which kinds of industries does MIP cater for, typically?

Traditionally, our industrial estates catered mainly for companies operating in a large variety of niches within the manufacturing industry, with another two areas being dedicated to local artisans and their crafts.

As our economy shifted towards service-oriented industries such as aviation, life sciences, and ICT, our property portfolio had to be adapted not only to meet existing demand arising from operators within these and our traditional industries, but also to anticipate the needs of tomorrow.

How much existing factory space is still available and ready for use, currently?

We manage in excess of three million square metres of industrial space, with almost 90% of this being contracted to ongoing operations that employ thousands of people.

The remaining vacant space mainly consists of land, with built-up factories only amounting to around 30,000sqm. With most of this already in the process of being allocated and a small share of properties being tied up in litigation, we are left with only around 6,000sqm of readily available factory space.

The lack of space clearly presents a challenge if we are to sustain the economic growth, the attraction of new investment, and the creation of new and better employment opportunities. We are thus working very hard not merely to address this issue, but to do so in a sustainable manner that strikes a balance between optimizing the space we have available whilst respecting the environment and the communities that live and work within.

Due to Malta’s size, factory space is undoubtedly an issue. At the same time, environmental concerns related to overdevelopment have also increasingly gained prominence in the past years. How is MIP tackling the problem of finding new space for factories, as the economy expands, while at the same time avoiding further encroachment on undeveloped and green areas?

We have a challenging task to provide the industrial space that the country needs in a sustainable manner that also takes into consideration the environment and our communities.

MIP is being proactive in this regards, and since 2016 we have been commissioning various studies that amongst others have looked into what type of industry do we have in Malta and what else is being attracted, what is the demand being anticipated for the coming years, what type of properties are required, and so on.

Towards the end of 2018, backed by these studies we came up with a 10-year strategy with a 5-year immediate plan. Two of the Strategic Objectives we adopted and which are guiding our work are the generation of vacant property, and the environmental improvement of the property owned and managed. We see the two as complementary to each other.

We believe the way forward is to improve the efficiency and optimize the use of space, including through the establishment of clusters, going vertical and having multi-level facilities. This would help us in providing the space for approved projects in a reasonable time to continue attracting investors, whilst at the same time reducing the impact on the environment.

We are trying to apply these principles to any new project as well as to any redevelopment whenever a property is returned to us, as this will help us future-proof our properties and address long-term sustainability.

What is MIP’s role in terms of bringing foreign firms to Malta and increasing the country’s FDI attractiveness?

While Malta Enterprise takes the lead role in attracting new foreign investment to Malta, especially in terms of generating leads with prospective investors and in terms of communications and marketing campaigns, we do regularly support these initiatives.

Having said that, we still play a crucial role in attracting investment to Malta by ensuring that our industrial estates and facilities are a desirable and attractive location for them to operate in. Our work in this area never stops, and plans are in hand to improve the situation in those areas that may perhaps require a bit more attention.

Moreover and I would also say more importantly, by giving as good a service as possible to our tenants and ensuring their experience with us is a positive one, we are also paving the way for others to follow suit and be encouraged to set up in Malta by our business-friendly and supportive approach.

The coronavirus pandemic has caused major changes throughout the world, with discussions currently ongoing on how society and the economy will start adjusting to a “new normal”. When it comes to manufacturing, what kind of changes do you envisage COVID-19 will cause in terms of work practices and to industry norms in general?

First of all, I would like to take the opportunity to wholeheartedly thank all those who in one way or another contributed to minimize the impact of the pandemic, from the front liners in the medical field who were crucial from the perspective of our health as individuals and as a community, to those who have been hard at work to address the economic aspect.

While it may still be too early to say what will happen especially in the longer term, I believe that the pandemic will nonetheless change certain work practices. We have come to realise that certain jobs can easily be handled remotely or meetings held online, which in many cases led to increased efficiency and productivity as less time was wasted in traffic.

Quite a few companies including in the manufacturing industry will also be looking at ways how processes can be simplified through new technologies, possibly through automation, in order to minimise their risk of disruption.

I also foresee that the increased consciousness about health and sanitary standards will lead to changes in our work practices and environments, while such external environmental forces will be taken into consideration in risk assessments.

Our work to life balance has also changed in this context, and the new normal may be different from what we were used to before.

Has MIP experienced issues related to clients defaulting on payments in recent years, and how is it tackling the issue?

The studies I mentioned earlier had also helped us in implementing a restructuring process throughout our organization, including in our rent collection system.

This has already resulted in overall significant improvements in the timely payment of the rent due, and we foresee further improvements as we build on our experience in this regard.

MIP is currently supporting a University of Malta research project on using reconstituted stone - made of construction and demolition raw material - as an alternative to traditional limestone or concrete. Why did MIP choose to be involved in this project, and what benefits can such a product provide for industry?

MIP is one of the major developers in the country, and as such we generate a significant amount of construction and demolition (C&D) waste whether we are building a new property or redeveloping existing facilities to better suit investors’ needs.

We are also promoting a number of projects, such as the rehabilitation of the former Luqa dump on the outskirts of the Marsa industrial estate, that would be piling even more C&D waste on our already saturated dumping facilities if the status quo persists.

The dumping challenge we are facing as a country, together with our true belief in finding a balance between sustainable development and reducing the impact on the environment, made us look around for innovative solutions. We were lucky to find one in our own backyard, thanks to the research being carried out by Prof. Spiridione Buhagiar and his team at the Faculty for the Built Environment within the University of Malta.

We have the opportunity to apply the principles of the circular economy throughout our industrial estates. What previously was only considered as waste to be dumped, can now be transformed into a secondary raw material that is then converted into a resource – in this case: reconstituted stone.

By using this alternative resource in our projects we would be both mitigating the concerns related to the dumping of C&D waste by easing the pressures on our landfills, as well as reducing the demand for natural resources also in view of the fact that our quarries have a finite supply.

The research so far has shown that, depending on the level of compression, the reconstituted stone can be stronger than existing concrete blocks, and it has more resistance to the elements when compared to natural stone and thus it deteriorates less. Since it is formed as a paste, its level of finish, shape, and even its colour can be customised easily according to one’s needs.

Taking into consideration all these benefits, as well as our desire to lead by example in promoting sustainable development, our involvement and commitment to support the University of Malta in bringing this project to fruition was an obvious choice. We hope to encourage industry to follow suit and to look into how they too can benefit from this innovation.

Looking forward, what developments are planned or in the pipeline for MIP and industry in Malta in general?

We believe that the current situation may be turned into an opportunity to deliver major infrastructural projects that were being planned but are yet to materialise because of the relentless pace with which the economy was growing in the recent years, when our priority was to support the infrastructural demands of that growth.

In this period of economic lull caused by the COVID-19 pandemic, our nationwide projects programme can anticipate the future needs of our industry.

Moreover, by embarking on this programme, we would also be contributing in the provision of a much-needed stimulus that would help in getting our economy get back on track.

We have various projects in the pipeline, especially within the manufacturing, life sciences and aviation industries, all of which keep in mind the long-term sustainability, as well as a more efficient use of the space with consequent reduction of the environmental impact. Such projects include the extension of the Malta Life Sciences Park, new SME Parks, clustered environments, mixed-used facilities, enabling infrastructure, factory extensions, storage facilities, car parks, and several more.

Building up on the existing industrial zones, we can prepare modern and sustainable industrial infrastructure that would be future-proof and ready to host investment that is attracted to Malta in the coming years, thereby ensuring we can keep attracting investment and generating quality jobs for the benefit of our community.

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