Government proposes revamping taxes and resort rent

The government plans to revamp taxes and rent from tourist resorts to revitalise the industry, Tourism Minister Dr Ahmed Sawad has said

Speaking to Minivan News today, Sawad said the current fixed costs of bed tax and lease rents served as a disincentive to investors.

Under the government’s proposed scheme, tourists will pay an ad valorum tax instead of a fixed bed tax. This means tourists will pay a percentage of the room rate rather than the fixed rate of US$8 per bed.

Last month, Eugene Radilesku, a consultant from the International Monetary Fund, said the government needed to capitalise on revenue from the tourism industry. For a hotel room that ranges from US$200 to US$500 per night, he said, the government only earned about US$8 in revenue.

Sawad said the lease rent for islands will also be changed from a fixed rate to one that is varies with the area of land.

All resorts will be subject to the changes, said Sawad. “We have very high lease rents and this creates a very high room rent, which is a vicious cycle. This will also encourage investors to continue development of resorts under construction.”

There are currently 58 resorts under development.

The new structure would also lower investment and enable resorts to make profits sooner, resulting in more mid-range resorts, said Sawad.

The government planned to submit a bill on ad valorem tax to the next session of parliament, he said, along with legislation to replace lease rents and extend the lease period from 35 to 50 years and beyond.

Dr Abdullah Mausoom, opposition Dhivehi Rayyithunge Party (DRP) MP for Kelaa, said the party’s views will be made known at the parliament floor when the bill is debated.

“One thing I have learned is that there is not enough consultation with stakeholders,” he said. “It’s very important that stakeholders in the tourism industry, who will be the most impacted by this, are consulted.”

He added DRP will be meeting with the Maldives Association of Tourism Industry (MATI) to discuss the matter.

Mohamed “Sim” Ibrahim, secretary general of MATI, told Minivan News today that the government gave a draft of the ad valorem tax legislation to the association today.

“There are several proposals the government has put on the table,” he said. “We have to see which of these is best for the country.”

The government needed to consider the impact on the industry, he added, and the introduction of taxes should be gradual.

“We can’t talk about quick solutions and knee-jerk reactions,” he said.

Sim said he did not think ad valorem taxes would lower the cost of investment. “I think it will be higher. It is much easier now because you know exactly what you’re paying and how you’re paying.”

But, he added, the government was consulting with MATI and other stakeholders in the industry.

“There is a process of exchange of opinions and ideas,” he said.

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Religious TV channel at centre of dispute

The Adhaalath party has accused the Dhivehi Rayyithunge Party (DRP) of opposing the Islamic ministry’s plans to establish a religious TV channel using Zakat funds for political reasons.

A strongly-worded press release issued on Sunday states that the Adhaalath Party welcomes religious scholars from political parties criticising policies to hold the government accountable.

“But the Adhaalath party will speak out against anyone who seeks to use religion as a weapon to conceal personal motives,” it reads.

It adds that the DRP press release was intended to deceive people and undermine Maldivians’ faith in Islam.

A press release by the DRP last week stated that, according to the Qur’an, the Zakat fund can only be spent on eight categories of people, including the destitute, the poor and needy, those who collect alms, those in debt, wayfarers, converts, to liberate slaves and to promote Allah’s cause.

While the DRP statement interpreted the last category as funds for supporting holy wars or jihad, the Islamic ministry has said it extends to the propagation of Islam.

Establishing a television channel, building mosques, paving roads or arranging funerals for the poor from Zakat funds was prohibited in Islam, it continued, calling on the government to halt its plans to use the funds to build prayer rooms in schools and set up a television channel.

Last month, Islamic Affairs Minister Dr Abdul Majeed Abdul Bari said promoting the cause of Allah or Fi Sabeelillah did not only refer to jihad.

Bari said Rf2 million (US$156,000) was spent to establish an Islamic TV channel from the Zakat fund under the principle of Fi Sabeelillah.

“We did not say we are spending the Zakat fund allocated for poor and needy,” he said. “We decided to spend funds allocated for Fi Sabeelillah. We made the decision based on Fatwas issued by Islamic scholars.”

The Adhaalath Party press release refers to the Fiqh Sunnah of Sheikh Sayyid Sabiq, which states that Zakat funds can be used to pave roads, provide food and water and medical treatment for pilgrims.

Quoting the Fiqh Sunnah, it adds that the funds could be used to build military hospitals and finance social projects.

Further, Fi Sabeelillah includes training religious scholars to preach Islam and find converts in the manner of Christian missionaries as well as build religious learning centres.

The al-Azhar University in Egypt spends Zakat funds on pocket money for its students, the press release continues, adding that the DRP leader and his colleagues would have received this money when they were studying in Egypt.

“Therefore, if they are saying that Islam does not allow using these funds for a noble purpose, they are talking about some other religion,” it reads.

In the past, Zakat and welfare funds were misappropriated to spend on relatives and associates of former President Maumoon Abdul Gayoom, the Adhaalath party press release alleges.

It goes on to urge members of DRP to repent and “confess to their crimes before the people”.

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Government proposes hiking departure tax

The government has submitted a bill to increase departure tax and generate revenue for improvements to border control and aviation safety.

Mahmoud Razee, minister of civil aviation and communication, said the departure tax would be increased from US$14 to US$18.50.

The government has also submitted a civil aviation authority bill to parliament which will allow the establishment of a body to oversee aviation-related activities such as safety.

Razee said the establishment of an independent institution had been recommended by the International Civil Aviation Organisation (ICAO).

The ICAO is a UN agency that regulates international air navigation to ensure safe growth of the industry. The council recommends practices concerning air navigation, infrastructure, flight inspection and facilitation of border-crossing procedures.

Razee said he did not think the increase would deter holidaymakers as the tax was still low compared to other countries in South Asia which charged tourists an average of US$20.

Speaking to an international group of journalists last month, President Mohamed Nasheed announced the government’s decision to introduce a US$3 a day green tax on all tourists.

He said the revenue generated would go towards making the Maldives carbon neutral within a decade and a sovereign fund to relocate the population if rising sea levels swamp the island nation.

But, Tourism Minister Dr Ahmed Sawad said it was more likely the government would take a percentage from other taxes such as the departure tax for deposit in a green fund.

“We have been talking about a lot of taxes and have created debate in the public domain,” said Sawad. “What I believe is going to happen in the near future is we will streamline all of these ideas into a single tax.”

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President spreads climate change message

President Mohamed Nasheed was presented with a ‘Not Stupid’ award yesterday for his efforts to tackle climate change at the global premiere of the Age of Stupid.

The Age of Stupid was premiered yesterday in a solar-powered tent in New York and was attended by A-list celebrities and world leaders alike.

The president has fast become the moral voice of climate change after announcing his plan to make the Maldives the first carbon neutral country in the world earlier this year.

The film is a docudrama starring Oscar-nominated Pete Posthethwaite as an old man living in 2055 in a world ravaged by climate change. In the film, Posthethwaite looks back on archival footage from 2008 asking the all-important question: why didn’t we stop climate change when we had the chance?

The premiere was held a day before the climate change forum at the 64th UN General Assembly where world leaders hope to begin negotiations leading up to talks in Copenhagen, Denmark, this December.

Positive thinking

Hours after the premiere, leaders from small island states gathered to demand the world step up to the challenge of climate change and global temperatures be sharply reduced from targets recently set by industrialised countries.

At the high-level summit of the Alliance of Small Island States (AOSIS), the president’s call for the declaration to be couched in positive rather than negative language was unanimously passed.

Nasheed said while the climate change debate had so far centred on a ‘prohibition list’ a ‘positive list’ of actions would be equally effective. “If we go to Copenhagen with this line of thinking, we can’t achieve anything.”

He added countries should focus on investing in green technologies rather than solely on cutting carbon emissions and urged small island states to speak with a ‘singular voice’ at Copenhagen.

The declaration calls for a cap in temperatures of 1.5 degrees as well as financing to help islands adapt to global warming.

The UN Intergovernmental Panel on Climate Change forecasts temperature rises of between 1.1 and 6.4 degrees celsius within the next century.

Climate change is already delivering damage not of our making,” the Maldives president, Mohamed Nasheed, told leaders, according to the British newspaper The Guardian.

“Should we, leaders of the most vulnerable and exposed countries, be asking our people to sign on to significantly greater degrees of misery and livelihood insecurity, essentially becoming climate change guinea pigs?”

Tillman Thomas, the president of Grenada in the Caribbean, told Reuters failure to act at Copenhagen would amount to ‘benign genocide’.

Small island states are among the countries most vulnerable to sea level rises and flooding from melting ice caps, as well as among the least responsible.

Against all odds

In another event, Nasheed addressed a rally of hundreds of labour, environmental, student and community activists calling for action on climate change yesterday. The rally was organised to kick-off World Climate Week.

In his speech, Nasheed highlighted the importance of grassroots movements to pressure leaders to take action on climate change.

“I’m not saying this because I have read this from a book, but I’m saying this because I’m living it. We have changed a thirty-year dictatorship against all odds,â” he said.

The president said good governance was essential to climate change as corrupt governments would not bring positive outcomes.

Nasheed said he believed humankind was not ‘stupid’ enough to ignore climate change and destroy the earth for future generations.

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Medhufushi Island Resort

Medhufushi is a newly reconstructed five-star resort, back in action since January 2007 and rebuilt after the tsunami with a near-identical design as when it first opened in December 2000. Situated on a long, thin island full of mature greenery, it is one of only two resorts currently in Meem Atoll. You walk in from the jetty over the lagoon and into the lounge by the bar and restaurant. The area sets the tone for the resort – beautifully constructed sturdy wooden buildings with high palm thatch roofs, grand chandeliers and a natural finish.

The resort’s staff, numbering around 150, are friendly and diligent without intruding and the island offers unadulterated relaxation. It is not for partygoers and works instead to offer a totally relaxing environment, to pamper guests and allow visitors to indulge in the laid back pleasures of the sun and the sea.
The Vilu bar and Al Fresco restaurant are both situated above the lagoon jutting out from the island.

The restaurant offers an alternative a-la-carte menu, separate from the buffet, which charges between $50 and $60 for exquisite and filling three course meals.

Move onto the island and you will see the freshwater infinity pool, a few yards in front of the grand Malaafaiy restaurant, both overlooking the lagoon. It offers buffet style breakfast lunch and dinner, with a massive variety of finely prepared foods ranging from sushi, to salad, to steak.

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A symbol of hope

After hearing numerous criticisms over the past few months about Dhuvaafaru, I went to the inauguration ceremony on Monday, pen in hand, prepared to bombard the pages of my pad with corrosive words about what a disaster the project had been.

As the seaplane circled above the island, the rows of utilitarian houses did nothing to dispel my scepticism, so far away were they from my vision of a home.

How wrong I was.

The inauguration of Dhuvaafaru was unexpectedly touching and my cynicism soon gave way to an enduring optimism. From the play that re-enacted their tsunami experience to the banquet islanders had prepared, the spirit of warmth and gratitude that filled the air was one of real sincerity.

Wearing an International Federation of Red Cross and Red Crescent Societies (IFRC) hat, islanders bounded up to me to shake my hand and thank me for their new home. Having played no part in the reconstruction efforts of the IFRC I felt like a fraud…a proud fraud.

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Riding the waves

While one surfer rides a wave with apparent ease, another does an elaborate 360 degree turn on his body board. This is enough to draw a throng of onlookers to the Surf Point in Male’. Many of the young men who circle the capital on their motorbikes before break fast are brought to a halt by the mesmerising waves and those riding them.

With Ramadan drawing to a close, Wataniya and the Maldives Surf Association have teamed up to host four-day surfing competition, Wataniya Virasee. “We wanted to hold an entertaining event for Ramadan and have fun with the public,” said Maryath Mohamed, public relations officer at Wataniya.

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Supreme Court to decide appointment of ACC member

The government will ask for legal advice from the Supreme Court over the appointment of Hassan Luthfee to the Anti-Corruption Commission (ACC), Attorney General Husnu Suood has said.

Although President Mohamed Nasheed recalled Luthfee’s nomination, parliament rejected his substitute nominee and approved Luthfee to the commission.

Last week, members were sworn in to the commission without Luthfee.

Addressing press today, Suood said Luthfee’s nomination was not valid after the president withdrew his name.

“The principle I consider in advising the president is whether there is any obstacle in the law for him to withdraw a name or a period for him to do it,” he said. “If the Majlis has not passed the name, I believe the president can withdraw the name at any time.”

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One minute to midnight for Maldives’ corals

From the air, the Maldives is a breath-taking vision to behold. White sand islands encircled by cerulean lagoons lie scattered in the navy sea. Delve beneath its turquoise waters and it is equally spectacular. A panoply of psychedelic fish, honeycomb moray eels, violet soldierfish and orange-striped triggerfish to name a few, flit among a treasure trove of coral.

But while the Maldives has grabbed headlines world over for being one of the most vulnerable countries to climate change, fated to disappear beneath the waves if sea levels continue to rise, its underwater Shangri-La has received little press.

If the experts are right, however, the Maldives’ coral reefs are in terminal decline. A UN report entitled The Economics of Ecosystems and Biodiversity released last week in Berlin, stated the world’s coral infrastructure and accompanying biodiversity would be the first ecosystem to go due to climbing greenhouse gases.

Bedrock

The message is critical; the reality is grim. “Corals are the foundation of the whole ecosystem, the building blocks of the reef itself,” said Guy Stevens, a British marine biologist at Four Seasons resort. “If the reef went, the Maldives would cease to exist, the islands themselves would be eroded and washed away. Without them, there’s nothing.”

Anke Hofmeister, a German marine biologist at Soneva Fushi resort is similarly pessimistic. “We can always argue that the coral reefs are recovering… but there’s definitely reason to think the reefs will disappear…this is the tipping point.”

Their fear is not unfounded. Anthropogenic carbon dioxide and other heat-trapping gases continue to drive global warming. Add into the mix, the local hazards of overfishing, an inadequate waste management system and population expansion, and corals have little chance of survival.

The vast colonies of coral, the bedrock of the Indian Ocean archipelago, are formed by the calcium carbonate secretions of tiny creatures called polyps. Living within the polyps, microscopic algae, zooxanthellae, take carbon dioxide for photosynthesise in return for food. As corals die, their calcium exoskeletons turn to limestone providing the perfect foundation for new generations of polyps to settle.

Yet while it has taken nature millennia to create the chain of 1,192 coral islands, it has taken humankind just over a hundred years to virtually wipe it out. The country’s fragile ecosystem lies on a knife-edge as concentrations of carbon dioxide in the earth’s atmosphere already exceed the safe threshold of 350 ppm.

Humanitarian catastrophe

Failure to curb emissions will condemn reefs to extinction, leading to dire economic, social and humanitarian consequences. In the Maldives, both tourism and fishing, which provides 71% of national employment and 49% of public revenue, will be hard hit. “Our whole existence, our livelihoods depends on reefs. It is a human rights issue because it will affect our right to life,” says Hussein Zahir, a senior reef ecologist at the country’s Marine Research Centre.

The loss of the Maldives’ coral ramparts will cripple the country’s ability to protect itself against extreme weather events caused by global warming. A government report estimates reefs absorb up to 90% of a wave’s force. As one of the lowest lying countries in the world, the Maldives is particularly vulnerable to waves, storm surges, cyclones and rises in sea level.

El Nino, the mass bleaching event of 1998, was the single most cataclysmic event in the history of coral degeneration in the Maldives. Up to 90% of the nation’s corals in some parts of the country were killed following the three-degree rise in ocean temperatures. Stressed out polyps evicted their colourful tenants – zooxanthellae – and were left a ghostly shade of white. For Stevens, the threat of one-off catastrophes such as El Nino pose one of the biggest threats to coral reefs.

Accelerating

Although a natural phenomenon, scientists predict that as sea temperatures rise, such incidents of large-scale bleaching will increase. “The frequency and magnitude are linked with global warming,” says Stevens. “As we warm up the earth, we are playing with the natural cycles, upsetting the equilibrium. Before a drought in one area of the world might result in a flood somewhere else. It was a see-sawing effect, but now there’s no balance.”

Hard on the heels of the tribulations faced by corals is another more critical threat. In June, the national science academies of 70 countries signed a statement warning that rising acidity in the world’s oceans would lead to a global catastrophe. The scientists said the oceans were more acidic than they had been for the past 800,000 years and urged ocean acidification to be put on the agenda at the Copenhagen climate change conference in December.

Oceans have absorbed around half of all carbon dioxide produced by humans since the industrial revolution, slowing global warming. But an overabundance of the greenhouse gas has tipped the balance. The resulting high levels of acidity impair the ability of some organisms to secrete calcium carbonate. This applies not only to polyps but a host of marine creatures, among them, phytoplankton – microscopic algae at the bottom of the food chain, responsible for producing half of the world’s oxygen. “It’s quite alarming if we think that it’s the base of the food chain,” says Verena Wiesbauer, a marine biologist at Water Solutions, an environmental consultancy firm in the Maldives.

A minute to midnight

Despite the doomsday scenario predicted by many scientists, marine biologists at the country’s luxury resorts are hard at work in search of stop-gap measures to buffer reefs from further climatic hardship. Coral propagation is one such technique. Fragments of coral are attached to a variety of structures from cement discs to electrified steel frames designed to encourage the birth of new colonies. The results so far have proved promising.

But while coral gardening may be an important conservation tool, most marine biologists agree it is not a large-scale solution. “There may be localised benefits from coral transplanting projects but in the long-term we need to concentrate on how to preserve what nature has given us,” says Hofmeister. “Ecosystems have been established over so many millions of years and you can’t just rebuild that.”

For now, the consensus is that coral reefs are teetering on the precipice of extinction. “It is one minute to 12,” says Wiesbauer. “The problem is that economy will always win and ecology will always lose.”

The climate change talks offer a glimmer of hope. If world leaders are able to put national interests aside and thrash out a successor to the Kyoto protocol then coral reefs may have a chance at survival.

Failure to commit to drastic cuts in greenhouse gases emissions will sound the death knell for coral reefs and spell the beginning of the end for other ecosystems. As a microcosm of the world, the plight of the Maldives and its fragile reef should be heeded, says Hofmeister. “We see the effects much much earlier here than other countries,” she says. “But it is only a matter of time before what happens here, happens to the rest of the world.”

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