Author: JJ Robinson

Government scuttles Male City Council’s Taiwanese sister city agreement, pledges support for “one-China policy”

The government has issued a statement denouncing Male’ City Council’s decision to become sister cities with Kaosiung City in Taiwan, and pledging the Maldives’ support for the “one-China policy”.

“The Government of Maldives reaffirms its commitment and support to China’s national unity and to the one-China Policy,” said the Foreign Ministry in a statement, shortly after the opposition Maldivian Democratic Party (MDP) dominated Male City Council signed the sister city agreement with a Taiwanese delegation on Sunday.

“The Maldives’ firm conviction of one-China policy is guided by the principles of respect for sovereignty, territorial integrity and non-interference in the internal affairs of states and considers Taiwan as an integral part of the People’s Republic of China,” the government stated.

An official from Taiwan’s Ministry of Foreign Affairs told the Taipei Times this was “the first time a local government’s efforts to establish sister-city ties with a foreign city had been thwarted due to apparent pressure from China.”

Mayor of Male City Council Ali Manik visited Kaohsiung in November 2012 after the city was assigned to mentor Male’ in sustainability by the international organisation of which both are members, Local Governments for Sustainability (ICLEI).

A statement from the Greater Kaohsiung government revealed the delegation had shared Taiwanese experience in the management of drainage pipeline networks, waste disposal, offshore submerged breakwaters, plant diseases, pest control and solar power development.

“The delegation also conducted a field study of Male’s construction of a rainwater sewer system, erosion-prone sea embankment and how it deals with waste disposal and processes raw kitchen waste,” reported the Taipei Times.

Mayor Manik said sister city agreements were “normal” and something almost every city in the world participated in, to promote cultural development. The Male-Kaosiung agreement, Manik said, involved “training in fields such as agriculture, mariculture, education in waste management and health related fields.”

Changing demographics

Chinese visitors now constitute 25 percent of all tourism arrivals to the Maldives, a figure that has in the past several years eclipsed the Maldives’ traditional European markets.

Resorts have had to quickly adapt to the new demographic, with resort managers noting the market heavily favours excursions and shopping over food and beverage offerings traditionally targeted towards the European audience.

Some properties have underestimated the market. In March calls for a tourism boycott of the Maldives exploded across Chinese social media networks, after allegations of discrimination against guests from China at one resort were widely circulated.

Dismissed Chinese employees of the Beach House Iruveli resort – formerly Waldorf Astoria – posted allegations on the Chinese forum Tianya that guests from the country were receiving inferior treatment to Europeans, despite paying the same prices.

The staff alleged that this discrimination extended to removing kettles from the rooms of Chinese guests, to prevent them making instant noodles in their rooms and thereby forcing them into the resort’s restaurants.

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Government halts transfer of airport operations to MIAL, pending arbitration

The government has declared that the Maldives Airports Company Limited (MACL) will continue operating Ibrahim Nasir International Airport (INIA), apparently abandoning efforts to transfer operations to the newly-created Male’ International Airport Limited (MIAL).

The President’s Office said in a brief statement today that while the government had intended MIAL to take over the airport’s operation, the decision to abandon the attempt “was was made as the termination of the contract between the government of Maldives and GMR [is] currently in the arbitration stage.”

The decision follows an increasingly fractious series of emails between MACL and Axis Bank, one of the lenders to the GMR-MAHB airport consortium which had its concession agreement to upgrade and operate the airport summarily terminated by the new administration in December 2012.

While the sudden termination of the agreement is the subject of current arbitration proceedings in Singapore, Axis Bank separately called in US$160 million worth of loans for the project which had been guaranteed by the Maldivian Finance Ministry at the time the deal was signed.

With arbitration ongoing, Axis Bank expressed concern that the creation of MIAL was an attempt to dissipate MACL’s assets ahead of a verdict and turn it into a shell company, and sought a guarantee from the government. That correspondence led to an exchange of heated letters from Singapore-based law firms representing both sides, particularly after Finance Minister Abdulla Jihad appeared to contradict earlier assurances from MACL by informing local media the transfer was expected to be completed by July 1.

MIAL’s appointed CEO Bandhu Saleem however told Minivan News at the time that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Saleem is now to be appointed managing director of MACL, reported Sun Online citing a government official, with MIAL to be abolished ahead of a final decision on the matter.

Uncertainty

National political turbulence and uncertainty over the MACL-MIAL transfer in May led the global body representing the world’s airports, Airports Council International (ACI), to caution its members over the government’s potential “sale of equity in this entity to another airport operator.”

“ACI members are advised to conduct due diligence while considering any investment in the Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework,” the email stated, warning potential investors that “any leadership changes arising out of the elections [could] have a material impact of the future of the Male’ airport and the decision of expropriation.”

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No intention to transfer assets to MIAL: MACL to Axis Bank

The Maldives Airports Company Limited (MACL) and its lawyers have denied any intention of dissipating the state-owned company’s assets by transferring them to a newly-created, state-owned entity called Male’ International Airport Limited (MIAL).

MACL and the government of the Maldives are currently party to arbitration proceedings in Singapore after one of the lenders to the terminated GMR-Malaysia Airports (GMR-MAHB) development – Mumbai-based Axis Bank – called in US$160 million worth of loans which had been guaranteed by the Ministry of Finance.

A copy of the agreement from November 24, 2010, in which the Ministry of Finance guarantees the loans to GMR-MAHB, is signed and stamped by both then-MACL Chairman Ibrahim Saleem and Finance Minister Ali Hashim on behalf of the government.

Eviction and arbitration

In December 2012, the GMR-MAHB consortium, which had signed a 25 year concession agreement with the former government to manage and upgrade Male’s airport, was given a seven day eviction notice by the new government after it declared the concession agreement void ab initio, or ‘invalid from the outset’.

That decision is currently subject to arbitration proceedings in Singapore, with GMR-MAHB’s compensation claim expected to reach upward of US$1 billion. Axis Bank is pursuing the US$160 million in separate proceedings.

President Waheed’s government on March 14 meanwhile declared in a one-line statement that it was establishing MIAL as a new 100 percent state-owned company, and several weeks later announced the appointment of a board of directors including tourism tycoon and Chairman of Universal Enterprises, Mohamed Umar Manik, and Island Aviation Chairman Bandhu Ibrahim Saleem as managing director.

Finance Minister Abdulla Jihad informed local media on May 21 that MIAL would take over the operation of the airport under a management contract by July.

The apparent move to transfer MACL’s management functions to MACL led to a flurry of letters from Axis Bank to both MACL and the government, with the bank expressing concern that “if MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell.”

MACL’s denial

In a letter responding to Axis Bank’s CEO Bimal Bhattacharyya, dated April 24, 2013, and obtained by Minivan News, MACL’s Managing Director Ibrahim Mahfooz claims “your insinuation that MACL is attempting to dissipate assets to avoid and satisfaction of any judgement is insulting and without any basis.”

“For the record, we can confirm that MACL has no plans to transfer any of its assets to another company,” Mahfooz writes.

He accuses Axis Bank of making a case on “hearsay and speculation”, and asks whether its threat of legal action was “part of a concerted plan with any other parties”.

“You have tried to assert that your claim of US$163,596,347.78 remains unsatisfied. We had in our previous correspondence to you made it clear that you do not have a valid claim against MACL,” Mahfooz states.

“At best your alleged claim (at its highest) is purely a monetary claim against MACL and GOM. Please set out clearly the basis in which you think your claim will not be satisfied by MACL and GOM in the event Axis Bank is not successful,” he writes.

That letter triggered a further flurry of correspondence between Axis Bank’s legal representation Norton Rose and MACL’s Singapore-based firm Advocatus.

The latter firm, acting on behalf on MACL in December 2012, successfully overturned an injunction in the Singapore Supreme Court blocking MACL from taking over the airport, on the grounds that the arbitration court had no jurisdiction to prevent the Maldives as a sovereign state from expropriating the airport.

In the Singapore Supreme Court’s full verdict, a copy of which Minivan News has obtained, Financial Controller for the Ministry of Finance, Mohamed Ahmed, “affirmed in an affidavit that the Maldives government would honour any valid and legitimate claim against it. He also stressed that the Maldives government had never defaulted on any of its payments.”

Lawyer representing MACL, Christopher Anand Daniel, “also accepted that if the arbitration tribunal found that the Appellants were wrong in their asserted case that the Concession Agreement was void ab initio and/or had been frustrated, but the Appellants had by then already gone ahead with the taking over of the airport, they would at least be liable to compensate the respondent for having expropriated the airport” (emphasis retained).

Legal barrage

Stern letters exchanged throughout late April and most of May between the two sets of lawyers suggest brewing disagreement over whether MIAL’s assumption of management responsibilities for the airport can be construed as a transfer of assets and an attempt to dissipate its assets in preparation for a costly verdict.

“Almost all of MACL’s income comes from MACL’s management and/or operation of Male’ Airport,” notes Axis Bank.

“The stated purpose for the incorporation of MIAL is for MIAL to manage and operate Male Airport. This is a role presently performed by MACL. The natural consequence of the above facts is that if MACL ceases to manage and operate Male’ Airport and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell company,” Axis Bank’s lawyers noted, adding that the government had made no effort to deny this despite repeated invitations.

In response Advocatus, in a letter dated May 10 and obtained by Minivan News, declared “Your client [Axis Bank] has no evidence that MACL is dissipating assets to begin with. It is obvious that your client is attempting to see if it can create a case by correspondence when it has none.”

Following Finance Minister Abdulla Jihad’s pledge that the transfer of assets to MIAL would be completed by July 1, widely reported in local media, Norton Rose wrote another letter noting “[the Minister’s] statements are in direct contradiction to MACL’s position in its letter of April 24 stating that ‘For the record, we can confirm that MACL has no plans to transfer any of its assets to another company.’”

“These new developments, stated in the various news reports, lend credence to Axis Bank’s legitimate concerns that MACL is in fact attempting to dissipate its assets in favour of MIAL or any other third party and, consequently, there will not be sufficient assets to satisfy any arbitral award that may be rendered in favour of Axis Bank against MACL in the arbitration,” the lawyers wrote.

Advocatus responded on May 29, again accusing Axis Bank off “desperately trying to create a case where none exists.”

“The Minister, who had given the interview in Dhivehi, had been misquoted in the English version of news reports you mentioned,” MACL’s lawyers stated.

“When he gave the interview, the Minister had in fact said that ‘asset management is going to be officially handed over to MIAL’,” Advocatus contended.

Assets, management and the draft agreement

Meanwhile, a working draft of an ‘Operations and Management’ agreement between MACL and MIAL, dated May 21 and obtained by Minivan News, notes that MIAL “is a company established with the primary objectives of operating, maintaining and managing the airport.”

The agreement states that while the Finance Ministry has granted MACL the lease of the site and rights to operate and manage the airport, “MACL, in the interest of the better management of the airport, and/or overall public interest, is desirous of granting to MIAL the functions of operating, maintaining and managing the airport.”

The agreement includes provision for the transfer of employees from MACL to the new company, and the requirement that it obtain an aerodrome certificate from the Ministry of Civil Aviation – the core authority issued by the state for a company to operate an airport.

It also noted that “no proceedings against MIAL are pending or threatened, and no fact or circumstance exists which may give rise to such proceedings that would adversely affect the performance of its obligations under this agreement.”

MIAL would be paid management fees by MACL, although the extent of these are not included in the particular draft obtained by Minivan News. The agreement does however set out how “MIAL shall, on behalf of MACL, deposit all monies received from the operation of the airport into one or more bank accounts in the name of MACL.”

Board issues

Despite the Finance Minister’s comments on May 21, MIAL’s appointed CEO Bandhu Saleem has told Minivan News that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Minivan News is seeking to establish the current status of the new company. However further obstacles appeared this week in the form of the government’s Attorney General Aishath Bisham, who informed local media that President Waheed lacked the authority to appoint the boards of government-owned companies following the ratification of January’s Privatisation Act.

Instead, she said, the privatisation board created under that act operated as “a separate legal entity, and has the sole authority to appoint board members.”

Besides MIAL, President Waheed also in February appointed the board of the Maldives Ports Authority Limited (MPL).

“The Privatisation Board should investigate those cases,” suggested the attorney general.

Former President Maumoon Abdul Gayoom, whose Progressive Party of the Maldives (PPM) was among the most strident opponents to GMR-MAHB’s development of the airport, meanwhile appeared to have adopted a conciliatory tone during a visit to India last week to smooth troubled relations.

“[The cancellation] was a very populist move at the time as the public had a perception that the contract was bad for the country. The way it was handled was not good,” Gayoom was reported as telling Indian newspaper The Hindu.

“I am sad that this has somehow affected our bilateral relations. We want to overcome that and restore our relationship with India to its former level,” Gayoom told the paper.

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Government calls for immediate Tourism GST increase to 15 percent

The government has submitted a bill to parliament calling for the Tourism Goods and Services Tax (T-GST) to be increased from 8 to 15 percent, effective immediately.

The bill was submitted by Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed last week on behalf of the government.

A T-GST of 3.5 percent was first pushed through parliament by the former government in 2011, with planned increases to 6 percent in 2012 and the current 8 percent in 2013.

Prior to the introduction of the T-GST, the primary sources of state income from the tourism sector included resort rents, import duties, and a flat eight dollar a night ‘bed tax’.

During the first month following the introduction of the T-GST, the government collected US$7.2 million from 800 of the newly registered 871 tax papers, a figure that revealed the Maldives had been underestimating the total size of its main industry by a factor of three.

Economic crisis

The proposal to increase the tax comes as the Maldives faces increasingly dire economic circumstances.

Finance Minister Abdulla Jihad revealed in April that the government had exhausted its annual budget for recurrent expenditure (including salaries, allowances and administration costs) in the first quarter of 2013, and announced the suspension of all development projects.

The State Bank of India’s refusal to roll over loans at the start of the year has seen central bank reserves at the Maldives Monetary Authority (MMA) “dwindle to critical levels”, as noted by the World Bank, to barely a month’s worth of imports.

The State Electric Company (STELCO) – the country’s main supplier of electricity to inhabited islands – meanwhile revealed this week that the government had failed to pay electricity bills to the tune of MVR 543 million (US$35.2 million), and warned Parliament’s Public Accounts Committee in a letter that it faced cash flow problems and an inability to roll out new projects as a result.

T-GST rise contentious

Tourism industry figures have previously warned that a sudden increase in T-GST would have an immediate effect on the industry’s bottom line, as many resorts are locked into year-long supply and pricing agreements with tour operators.

An overnight near-doubling of the tax to 15 percent would have “serious ramifications on tourism and the Maldivian economy,” warned one resort manager.

“Most wholesalers will not accept price increases mid-contract irrespective of what clauses we put in a contract, as laws within the EU prevent this. Hence, this will have to be absorbed by the resorts,” he explained.

“I am aware that many resorts are struggling financially and this may be enough to put them over the edge. It will be very difficult to attract much needed foreign investment when the government continues to give these signals,” he added. “Why hamper and reduce demand to a destination that is already struggling to attract its core and traditional markets?”

The resort manager said that it was unreasonable to expect the resort industry to foot the bill for the state’s financial irresponsibility, “considering there have been limited efforts within the government to reduce its expenses. [The proposed tax increase] is short term thinking that will lead to a major default within the Maldivian economy and industry, if this proceeds.”

“What continues is a large bureaucracy that makes it as difficult as possible for tourism to provide high end service to its guests in order to maintain our positioning [in the market],” he observed.

“What is basically required is that these slow and lethargic government departments to go through a productivity and efficiency program. Make the processes more efficient, make civil servants accountable for productivity targets, reduce the government workforce and increase the percentage of Maldivian workers in resorts,” the manager suggested.

The issue here is that the resorts will need to cut costs and increase efficiency to counteract this. This may hamper guest service, product enhancements and refurbishment, and staff benefits which is again detrimental to the industry as a whole. The Maldives is a premium destination with premium levels of service and this tax increase would hamper this positioning. The Maldivian people will need to expect cost cutting and in some aspects retrenchments.”

New tax fatwa

Prior to the submission of the government’s proposed increase to the T-GST, local media reported that the Fiqh Academy had issued a fatwa (an Islamic ruling) prohibiting the government from levying taxes of any sort except under exceptional conditions.

Announcing the Fiqh Academy’s ruling in a statement on May 22, the Islamic Ministry noted that taxation was only permitted under Islam in certain circumstances.

“Tax can be taken from citizens to fulfill their basic needs, and only up to the amount required to fulfill these needs in cases where the state does not have enough money [for this],” the statement read.

According to local media, the fatwa requires that any tax money collected be “invested fairly and according to Islamic principles”.

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Govt will not sign current draft of SOFA, Defence Minister tells parliament

Defence Minister Mohamed Nazim has informed parliament’s opposition-dominated Executive Oversight Committee that the government will not sign the current draft of a Status of Forces Agreement (SOFA) with the United States.

Nazim alleged that a leaked draft of the agreement had been “doctored”, according to local media, however he refused to share the current draft with the committee.

The government would only share the draft with the National Security Committee, Attorney General Aisthath Bisham told the oversight committee.

“It’s just a draft, and is at a very infant stage,” Nazim was reported to have told the committee. “We discussed it with relevant government authorities. I myself don’t believe that the draft can be finalised without making the necessary amendments.”

Islamic Minister Sheikh Mohamed Shaheem Ali Saeed has also opposed the signing of the SOFA agreement.

“There is no way that the SOFA agreement can be signed, allowing foreign forces to stay on our land. Nor can we allow them to make the Maldives a destination in which to refuel their ships,” Shaheem stated previously on social media.

“The reason is, the US might attempt to use the Maldives as a centre when they are attacking another Muslim state. There is no way we will let that happen,” he said, asserting that he “will not compromise on the matter at all”.

The agreement

The leaked draft of the proposed SOFA with between the Maldives and the US “incorporates the principal provisions and necessary authorisations for the temporary presence and activities of United States forces in the Republic of Maldives and, in the specific situations indicated herein, the presence and activities of United States contractors in the Republic of Maldives.”

Under the proposed 10 year agreement outlined in the draft, the Maldives would “furnish, without charge” to the United States unspecified “Agreed Facilities and Areas”, and “such other facilities and areas in the territory and territorial seas of the Republic of Maldives as may be provided by the Republic of Maldives in the future.”

“The Republic of the Maldives authorizes United States forces to exercise all rights and authorities with Agreed Facilities and Areas that are necessary for their use, operation, defense or control, including the right to undertake new construction works and make alterations and improvements,” the document states.

The US would be authorised to “control entry” to areas provided for its “exclusive use”, and would be permitted to operate its own telecommunications system and use the radio spectrum “free of cost to the United States”.

The US would also be granted access to and use of “aerial ports, sea ports and agreed facilities for transit, support and related activities; bunkering of ships, refueling of aircraft, maintenance of vessels, aircraft, vehicles and equipment, accommodation of personnel, communications, ship visits, training, exercises, humanitarian activities.”

US position

US authorities have reiterated they have no intention to establish a base in the Maldives, and emphasised that the SOFA is a standard agreement used for conducting joint military exercises.

Former US Ambassador to Sri Lanka and the Maldives, now Assistant Secretary of State for South and Central Asia Robert Blake, told the Press Trust of India in May that the agreement referred to joint military exercises and not a future base-building endeavor.

“We do not have any plans to have a military presence in Maldives,” Blake said, echoing an earlier statement from the US Embassy in Colombo.

“As I said, we have exercise programs very frequently and we anticipate that those would continue. But we do not anticipate any permanent military presence. Absolutely no bases of any kind,” Blake said.

“I want to reassure everybody that this SOFA does not imply some new uptick in military co-operation or certainly does not apply any new military presence. It would just be to support our ongoing activities,” he said.

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Gayoom meets Indian PM

Former President of 30 years, Maumoon Abdul Gayoom, met Indian Prime Minister Manmohan Singh on Tuesday.

“His visit to Delhi is part of India’s outreach to all sections of Maldivian polity. It may be recollected that former President, Nasheed, has visited India twice and President Waheed was in India in May last year,” said Indian government sources, according to the Times of India (TOI).

“He discussed issues relating to the current situation in Maldives and bilateral relations with India. He said that he looked forward to India’s continued assistance,” an official told TOI.

“As someone who was instrumental in bringing about democracy to the Maldives, former President Gayoom felt that it was his legacy and that democracy should take firm roots in Maldives and there should be understanding amongst all political parties in this regard,” the official added.

Sacked Home Minister Dr Mohamed Jameel, who was one of the main opponents of Indian infrastructure giant GMR’s development of Ibrahim Nasir International Airport (INIA), was recently announced the running mate of Gayoom’s Progressive Party of the Maldives (PPM).

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MP Alhan Fahmy rejoins MDP

MP for Feydhoo Alhan Fahmy has rejoined the Maldivian Democratic Party (MDP), reversing his move to Gasim Ibrahim’s Jumhoree Party (JP) in June 2012.

The former MDP Vice President was removed from the MDP leadership post in a no-confidence vote supported by 95 percent of the MDP’s National Congress on April 30, 2012, after he and the party’s President Dr Ibrahim Didi were accused of making statements contradictory to the party’s official line concerning February 7’s controversial transfer of power.

Both men disputed the legitimacy of the process which led to their ousting. Dr Didi filed a complaint with the Elections Commission (EC), which was later dismissed, whilst Fahmy staged a sparsely attended ‘free MDP’ rally, protesting against what he alleged was the negative influence of former President Mohamed Nasheed on the party.

Didi and Fahmy shortly afterwards joined Gasim’s government-aligned Jumhoree Party, assuming leadership positions.

Fahmy was initially elected to parliament on a Dhivehi Rayithunge Party (DRP) ticket, making him one of the few MPs to have been a member of almost every major political party represented in parliament, barring the DRP’s splinter party, the Progressive Party of the Maldives (PPM). He was dismissed from the party by its disciplinary committee for breaking the party’s whip line in a no-confidence vote against then Foreign Minister, Dr Ahmed Shaheed.

Fahmy confirmed his most recent move to Minivan News, declaring his decision was made “because the country’s future lies with the MDP”.

MDP Spokesperson MP Hamid Abdul Ghafoor, who sponsored last year’s motion to remove Alhan from the party, said the issues “have been resolved” and that the party “welcomes anybody always. We have an open invitation,” he said.

“Alhan is a good speaker and another vote in the Majlis,” he added.

Speaker of Parliament Abdulla Shahid in April moved to the MDP from the DRP, stating that he had changed his political allegiance over concerns about the direction of the country’s democratic transition.

“I believe in the democratic Maldives built in 2008; will not stand by while opportunists & extremists drag our country back,” he tweeted at the time.

The DRP subsequently signed a coalition agreement with President Mohamed Waheed’s Gaumee Ithihaad Party (GIP), joining the Dhivehi Qaumee Party (DQP) and the Adhaalath Party (AP).

Alhan’s switch takes the MDP’s membership in parliament to 33 of the 77 member chamber, six short of the 39 majority needed to push through legislation.

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“International actors should not undermine governments”: Maldives responds to UN Special Rapporteur

The Maldives government has issued a statement inferring that UN Special Rapporteur on the Independence of Judges and Lawyers, Gabriela Knaul, undermined the country’s sovereignty and legal jurisdiction in her recent report on the state of the country’s judiciary.

Knaul’s final report to the UN Human Rights Council extensively outlined the political, budgetary and societal challenges facing the judiciary and wider legal community, as well as the politicisation of the Judicial Services Commission (JSC) and its failure to appoint qualified judges under Article 285 of the constitution.

The Special Rapporteur also expressed “deep concern” over the failure of the judicial system to address “serious violations of human rights” during the Maldives’ 30 year dictatorship, warning of “more instability and unrest” should this continue to be neglected.

“It is indeed difficult to understand why one former President is being tried for an act he took outside of his prerogative, while another has not had to answer for any of the alleged human rights violations documented over the years,” Knaul wrote.

The government, which made no response to Knaul’s initial statement in February, on May 28 issued a statement via its Permanent Representative at the UN Human Rights Council in Geneva, Iruthisham Adam.

“Engagement between national governments and international actors should not undermine national jurisdiction and the court system of any country, especially relating to ongoing cases,” reads the statement.

In light of this the Maldivian delegation, said Adam, “wishes to discuss specific matters contained in the report with the rapporteur.”

At the same time the statement “welcomed” the UN Rapporteur’s report and “fully acknowledge[s] that the various challenges she has identified and raised in her report are in fact the residue challenges present in a system in the midst of democratic consolidation.The Maldives judicial system continues to be hampered by structural deficiencies and resource constraints in addressing the difficult challenges facing the country in general.”

Read the UN Special Rapporteur’s full report

Read the government’s response

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Luxury tour operator highlights 35 percent slump in Maldives bookings

High-end luxury tour operator Hayes & Javis – part of the TUI group which also includes Thomson Holidays – has reported a 35 percent slump in bookings to the Maldives.

The company’s ‘long-haul trends’ report observed a similar slump in Caribbean island destinations, with Barbados down 51 percent and Antigua 58 percent.

“While off-the-peg beach packages are still popular – especially four and five-star all inclusive ones – there is no doubting the steady decline in demand for traditional fly-and-flop beach holidays,” said Hayes & Javis’ Commercial Head, Sean Dowd.

At the same time, the UK-based luxury operator noted an 11 percent rise in bookings to Mauritius, and similar increases for Tobago (16 percent) and the Dominican Republic (14 percent),” fuelled by the affordability of five-star all inclusive resorts”.

“Mauritius may yet prove to be the new Maldives. Strong airfare and hotel offers, high quality all inclusive resorts and the opportunity to twin with Dubai and other cities have all helped to fuel demand,” he added.

Implying that the trend away from ‘fly-and-flop’ holidays was not solely recession-related, Dowd observed that the operator’s multi-centre trip bookings “have doubled over the past two years because growing numbers of people are keen to see more of what a country – or a region of the world – has to offer when they travel further afield.”

The report noted that the destinations “making waves in 2013 are ones which lend themselves to a combination of city, beach and culture or heritage tours.”

“Multi-centre trips now account for over a third of our business and this growth trend is one which we expect to accelerate,” Dowd said.

Bad PR and changing demographics

The Hayes & Javis report attributes the sharp slump in Maldives bookings to “tough market conditions including increased land costs and poor exchange rates”, however the destination has recorded a steady increase in arrivals from around the world.

Tourism arrivals to the Maldives during the first quarter of 2013 were up 14.6 percent on the previous year, however up to a quarter of all arrivals at Ibrahim Nasir International Airport (INIA) are now Chinese, with the market eclipsing the country’s traditional staple of European holidaymakers. Some 70,570 Chinese arrivals were recorded for the first quarter of 2013, an increase of 51.2 percent over the same period last year.

Beyond changing demographics, the Maldives has also grappled with widespread negative global publicity in the wake of a flogging sentence handed to a 15 year-old rape victim in February.

The incident, which received particularly high volumes of media attention in the country’s core European markets – the UK and Germany – led to a petition calling for a moratorium on flogging by activist website Avaaz. The petition reached two million signatures barely a week – twice the annual number of visitors to the Maldives.

President Dr Mohamed Waheed pledged to appeal the sentence given to the minor by the country’s Juvenile Court, and review local laws to enact potential reforms of the use of flogging. No timeline for such reforms was set.

The tourism ministry meanwhile slammed what it labelled the “dubious” motives of the petition, alleging it to be “politically motivated”.

Deputy Tourism Minister Mohamed Maleeh Jamal in March said tourism had been a key driver of national development and democratic reforms in the Maldives for the last 40 years, and had “sacred” importance in the Maldives.

“People should not be doing anything to damage the industry. In Switzerland, you would not see a campaign designed to damage Swiss chocolate. Likewise you would not see a German campaign to damage their automobile industry,” he told Minivan News at the time.

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