Parliament’s Economic Affairs Committee has this week begun a review of the Business Registration Bill returned to the People’s Majlis by President Dr Mohamed Waheed Hassan, after it was originally approved in April.
The President’s Office told Minivan News that the bill, initially proposed under the previous government, had been returned over fears about the impacts it could have on the country’s economy at the present time.
Official government figures indicated that inflation had risen to an annual rate of 16.53 percent in April. Earlier in the year, the Finance Committee estimated that the current budget deficit would reach 27 percent of GDP, or Rf9.1 billion (US$590 million).
The government meanwhile announced this week that it had already been issued with a Rf300million (US$19.5 million) government loan from the Bank of Maldives (BML), despite questions being raised over whether the deal needed Majlis approval.
The government had previously asked for parliamentary approval for the budget support loan in place of an existing $65 million (Rf1 billion) loan that had been approved for the 2012 budget. The President’s Office claimed the funding, devised as part of a “mop up” operation, would help “reduce the circular flow of rufiya in the economy” adding it would not exacerbate the current national spending shortfall.
While unfamiliar with the latest amendments being proposed to the Business Registration Bill, a former Economic Development Minister who served under the previous government claimed the legislation had originally been devised in an attempt to simplify the registration of foreign investors.
However, President’s Office Spokesperson Abbas Adil Riza said that the bill was deemed by the present government to represent the implementation of a new tax regime in the country – a decision he suggested was unreasonable considering the current economic climate.
“At a time where as I’m sure you are aware, the economy is beginning to improve, the president and the cabinet has agreed that the time is simply not right to introduce new taxes,” he said.
According to local newspaper Haveeru, President Waheed’s concerns regarding the bill were said to include “Article 3 (e)”, which relates to services provided for islands beyond the capital of Male’. The report said that the nature of these services was believed to be unclear in the original drafting of the bill.
The president was also reported to have raised an issue with a perceived failure in the bill to specify a “process” required for the registration of a foreign branch of a company in the Maldives. The government therefore requested the removal of “Article 5 (b)” as well as a number of amendments relating to the registration of a branch of a foreign company in the Maldives, raising concern over a lack of specifics related to the use of the term “foreigners”.
When questioned by Minivan News, Abbas did not specify the exact nature of the potential “legal and socio-economic ramifications” that had concerned the government about the Business Registration Bill.
The bill was one of three pieces of legislation related to economic reform returned to parliament for revision last month on the basis of issues raised by Attorney General Azima Shukoor.
The exact nature of these concerns was not detailed by the President’s Office at the time, while the attorney general was also not responding to calls today about the nature of the government’s decision to return the bill.
Finance Minister Abdulla Jihad meanwhile forwarded Minivan News to the Ministry of Economic Development concerning an enquiry on the Business Registration Bill. Economic Development Minister Ahmed Mohamed was not responding to calls.
Although unfamiliar with the latest proposals for amendments to the Business Registration Bill, Mahmoud Razee, Economic Development Minister under the previous government, said the legislation was original proposed as part of a wider economic reform package championed by Nasheed’s administration.
The reforms, introduced under the previous government, were further revised following consultations with the International Monetary Fund (IMF) over how to strengthen and stabilise the economy.
These policies included introducing a general Goods and Services Tax (GST); raising import duties on pork, tobacco, alcohol and plastic products; raising the Tourism Goods and Services Tax (T-GST) to 6 percent; and reducing import duties on certain products.
Razee stressed that registration bill was intended specifically to provide a “clearer means” for facilitating foreign investment within the Maldives’ business sector.
“We were trying to make it easier to register foreign shareholders here,” he said.
Taking the retail sector as an example, Razee said that the retail sector was quite “restrictive” in terms of encouraging foreign investment.