Author: JJ Robinson

Blackmarket dollar crackdown won’t address demand, warn businesses, financial experts

Police today launched a crackdown on the blackmarket trading of dollars after President Mohamed Nasheed last night declared he would “put a policeman behind every dollar”.

The Maldives has been suffering a crippling dollar shortage for over a year, with most banks in the country sporadically refusing to trade dollars at the official pegged rate of Rf12.85.

Maldivians travelling outside the country and expatriate workers seeking to export their remittances are forced to rely on the unofficial black market, which trades dollars at up to Rf14. Panicked text messages appealing for dollars are circulated whenever emergency medical treatment is required overseas.

Until now authorities have turned a blind eye to the practice, as even many sizeable local businesses have been forced to obtain dollars from unofficial avenues.

Launching the operation, police accused the Maldives Monetary Authority (MMA) of failing to address the problem of foreign currency dealers violating their licenses.

“It has been noticed that the MMA has yet failed to take action, despite the exchange of US dollars in violation of policies, in order to regulate the exchange of US dollars,” police said in a statement.

“Information received as of now reveals that the receipt and reports that should be sent to MMA have not been sent, according to the policies of the MMA in effect. We have also received information that unlicensed dealers are exchanging US dollars against the policies devised by the MMA,” police said.

The first arrest was made today, after a man was arrested in a shop on the tourist strip of Chandhanee Magu for exchanging dollars at higher than the pegged rate.

“The shop was not licensed to carry out transactions related to foreign currency exchange,” Sub-Inspector Ahmed Shiyam told newspaper Haveeru.

The government has levelled blame at MMA Governor Fazeel Najeeb, and called for parliament to dismiss him for failing to respond to the President’s requests for counsel.

A letter from the President requesting Fazeel’s dismissal was read out in parliament today and the matter was sent to the Public Accounts Committee, which will make a recommendation to the floor. Debate on the subject today included proposed limits on carrying foreign currency out of the country.

Earlier this month following initial calls for Fazeel’s dismissal, leader of the opposition-allied People’s Alliance (PA) Abdulla Yameen appeared on Villa TV to defend the MMA governor, insisting that the dollar shortage was not reasonable grounds to dismiss Najeeb.

“The MMA is not responsible for solving the problem of the decreasing amount of dollars coming into Maldives,” he said. “The MMA has to maintain the value of dollars and rufiya… if there is a dollar shortage, what the MMA can do is use their open market operations to borrow from commercial banks and attempt to maintain the value of the dollar.”

If these efforts were unsuccessful, said Yameen, also former Trade Minister and former Chairman of the State Trading Organisation, the only other option would be to “officially devalue the rufiya.”

However, he added, the impact of such a move on the economy had to be carefully considered, or the rufiya would have to be devalued again after six months and the positive effects would be “nominal”.

“From what we can see now, [devaluation] will not be a solution for our structural problems,” he said. “Our biggest structural problem is that our fiscal policy is still recklessly expansionary, it is very much a spending policy without any control. Government expenses are very high and they are not trying to control it.”

Although the Maldives received a high amount of dollars as tourism revenue, “not all these transactions take place in the Maldives.”

“A lot of tour operators for example sell tour packages in Europe and send to the country only what has to be paid to the resort,” he explained.

The other major problem is investor confidence: “If the Maldivian economy is collapsing like this and the dollar shortage is reaching this level, private Maldivian investors will not want to keep their money in the Maldives. They don’t know when, under some law or regulation, the government will give them an IOU and take their money from the bank saying ‘in two years we’ll pay you back in dollars what we’re taking, but now we don’t have cash for foodstuff’ and convert it at the 12.85 rate after a decision by the cabinet – no investor or businessmen will have a guarantee that this won’t happen.”

MMA had not been able to solve the disparity between the rufiya and the dollars because devaluing the rufiya would only lead to spiraling inflation, he said.

An internal problem

Local economists and businesses badly affected by the dollar shortage, such as importers, dispute that the problem is either political or can be solved in such a manner.

A representative for a Dubai-based company supplying resorts in the Maldives explained to Minivan News that while he was required to pay suppliers in dollars and euros, “the resorts try their best to pay in rufiya. Their revenue is acquired in dollars, so they can [sell the dollars] on the open market and pocket the difference.”

“It’s a huge issue for the entire country and makes it very difficult for anyone to import. We’re lucky in that we have a parent company to which we can transfer revenue and which pays centrally,” he said, adding that not all companies operating in the sector were as fortunate.

“We keep a local rufiya account which we use for pay customs payments and incidentals, otherwise the only way to exchange is on the grey market. There you’re looking at Rf14 to the dollar,” he said.

He speculated that the crackdown on the unofficial market could be positive, “as the resorts would lose the incentive to trade dollars into rufiya and any forex coming into the country would stay here.

“But the flip side is that you still can’t change money – it’s an incredible situation when you can’t go into a bank with your Rf12,850 and change it into US$1000. Imagine what would happen in the UK if you walked into RBS (Royal Bank of Scotland) and asked them to change £1000 pounds into dollars and they refused to do it.

“A crackdown on the black market also need laws guaranteeing dollar supplies for banks, with liquidity provided by the government,” he suggested.

“What bothers me is that there’s plenty of dollars coming into the country, but the people in control of the economy seem to be hiding it away.”

A local financial expert working in the private sector, Ahmed Adheeb, told Minivan News that while the crackdown would enforce existing monetary law, “the problem from the point of view of an economist is that the dollar flow is there but the exchange rate is not at the market rate. There have been a lot of dollar fluctuations since it was pegged.”

Adheeb emphasised that building confidence in the rufiya was now “more important than anything else”, and an internal problem innately linked to the country’s high budget deficit.

“We are producing a lot of rufiya to finance the deficit. If the inflow is greater but the exchange rate is not adjusted, that becomes a problem,” he said.

“The government is pumping more rufiya into the economy to finance the deficit than it is earning in dollars. The confidence in the rufiya is not there, and there is no incentive for people to keep their savings in rufiya.”

Adheeb predicted that while the crackdown would limit exchanges on the black market, “there will still be huge demand for dollars.”

“When the black market suffers shortages, we may find ourselves in a situation where we can’t find dollars at all. Even now if I am individual it is difficult to find dollars, because the banks are not supplying. The total solution is for banks to supply to demand.”

The banks, Adheeb said, had significant dollar reserves but found the rate of exchange unacceptable.

A pegged rate had been instrumental in building investor confidence in the tourism sector, Adheeb noted, however it had led to an internal problem that had left the currency vulnerable to global fluctuations in the dollar caused by events such as the Gulf Wars, 2008 recession, rising oil prices, “and now reconstruction in the wake of the Japanese tsunami”.

“If I have savings in dollars, why would I exchange if the rufiya is so volatile?” he asked. “At the same time why is the government raising oil prices? Because of international price increases.”

Foreign investors in the country were already concerned, he noted, because of the difficulty of repatriating profits to the home country.

“Dhiraagu, for instance, is probably having a lot of difficulties repatriating dividends to Cable&Wireless. This can lead to a fall in investor confidence. When that happens, foreign investors will either try to exit or stay away. We will only see foreign investment that earns dollars, such as resorts.”

The problem would soon lead to inflation and difficulties importing essentials such as fuel and medicines, he suggested, and could potentially have a major impact if the State Trading Organisation (the country’s primary importer) found itself unable to acquire foreign currency.

“There is no reason why this should be politicised – it is a national issue, like a tsunami. We need to get together and solve this. I believe the economic outlook for the Maldives is good – the tourism sector is continuing to grow. We can manage this, it should not be a major problem.”

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Parliament confirms ongoing “confidential” investigation of JSC

Parliament’s Committee for Independent Commissions has confirmed it is conducting a closed-door investigation of the Judicial Services Commission (JSC), the body responsible for the appointment of judges and oversight of the judiciary.

The JSC has been both the subject of a damning report by the International Commission of Jurists (ICJ) and an investigation by the Anti-Corruption Commission into the JSC’s awarding of extraneous committee allowances.

Several judges – including Chief Judge of the Family Court Hassan Saeed – who were passed over for appointment to the High Court by the JSC have come forward to complain about issues relating to the JSC’s procedures after his appeal was dropped by the Supreme Court.

During a press conference held in parliament today, Committee Chair Mohamed Mujitaz confirmed that a sub-committee was conducting an ongoing investigation into the JSC, but said the members of the sub-committee had decided to keep the proceedings confidential.

According to Parliament’s regulations, closed door meetings can be held on issues relating to national security, law enforcement, or where a person is at risk of being defamed or perceived “as having committed a wrong.”

Minivan News understands that the three members of the Sub-Committee include Chair Ahmed Hanza, Mohamed Mujitaz and Independent MP Mohamed Nasheed. Hamza and Nasheed had not responded to Minivan News’ request for comment on the matter at time of press.

The President’s Member of the JSC, Aishath Velezinee, an outspoken whistleblower and critic of the JSC who has previously accused it of not just compromised independence but collusion with members of parliament to oust the executive, said the sub-committee had shown no interest in answering the letter of no-confidence she had sent in February 2010.

“On August 4 I sent a letter requesting an injunction order on the reappointment of judges until parliament had completed its investigation [of the JSC],” she said, adding that this too had gone unanswered.

Velezinee confirmed that JSC members had been summoned by the sub-committee, but had been informed that the questioning had related to her own conduct.

“The focus of the investigation appears to be taking action against me,” she claimed. “They’ve also asked for attendance sheets. Why is this being conducted in secret?”

“I’ve named five people – including two members on the sub-committee – as involved in this ‘silent coup’,” she said.

“The judiciary has not transformed [since the introduction of separation of powers], just transferred. The old boys [of the former administration] are trying the legitimise their return to power with a court order. Judging from the recent behaviour of the Supreme Court, it is in on it now which is utterly irresponsible and a tragedy.”

Professor Murray Kellam, a former Australian Supreme Court Justice who recently spent several weeks observing the JSC on the invitation of UNDP, pressed for transparency stating that “sunlight is the best antiseptic”.

“The process in your Constitution is that [in the event of] gross misconduct and gross incompetence, the Majlis (parliament) has the job of dismissing [the JSC], and that’s consistent with other places in the world,” he said.

“But the problem here is that the body making the recommendation is also the membership.”

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MJA reelects office bearers unopposed

The Maldives Journalist Association (MJA) has re-elected Editor of SunFM Online, Ahmed Hiriga Zahir, as the organisation’s President.

Ali Shamaan from the Maldives Broadcasting Corporation was elected Vice President.

Other members include Administrative Secretary Adam Haleem (Deputy Editor Sun Online), Budget Secretary Midhhath Adam (Editor Dhi-TV), and General Members Ali Yusuf (Haveeru Daily) and Hussain Hassan (SunOnline).

In a statement the MJA said that office bearers were appointed without an elections process as no other names were submitted, apart from for the General Member position.

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Rebels push Gaddafi back as NATO provides aircover

Forces loyal to Libyan President Muammar Gaddafi have been pushed back by Benghazi rebels after coalition airstrikes grounded both the Libyan airforce and tank columns.

The rebels yesterday retook the oil export towns of Brega and Ajdabiya in the country’s east, the latter 30 miles from the refining station at Ras Lanouf.

Spokesperson for the rebel’s Transitional National Council, Shamsiddin Abdulmollah, told journalists in Banghazi that Gaddafi’s forces were “now on the back because they no longer have air power and heavy weaponry available.”

AFP meanwhile reports that 117 people have been killed and more than 1300 wounded in a week of attacks by Gaddafi’s forces on Misrata, Libya’s third largest city, which has been targeted by snipers and artillery after French aircraft destroyed at least five planes and two helicopters in the region yesterday.

US President Barack Obama stated over the weekend that NATO was fulfilling the UN Security Council’s resolution and that the no-fly zone had been established to protect civilians.

“Make no mistake, because we acted quickly, a humanitarian catastrophe has been avoided and the lives of countless civilians – innocent men, women and children – have been saved,” Obama said.

Gaddafi’s government has accused the international community of pushing the country into civil war by choosing sides: “it is not to protect civilians because now they are directly fighting against the armed forces,” Deputy Foreign Minister Khaled Kaim told Associated Press.

Libya’s former ambassador to the United States, Ali Aujali, has meanwhile praised the intervention as warding off “another massacre in Africa that [would have been] remembered like Srebrenica and Rwanda. It was the right action at the right time.”

Meanwhile, the foreign press pack in Tripoli was visibly shaken after a woman in her 30s, Iman al-Obeidi, burst in on foreign journalists at the Rixos Al Nasr hotel to say she had been gang raped by 15 government militia.

Obeidi showed the media slashes and bruises on her body, and screamed as Gaddafi’s media minders hauled her outside. Two journalists who tried to protect Obeidi were punched and beaten by the minders, who smashed cameras and reportedly drew a gun and threatened the media, claiming Obeidi was mentally ill.

Correspondent with the UK’s Channel 4 television station, Jonathan Miller, was knocked to the ground and kicked when he attempted to intervene.

“There was a desperate sense of our failure to prevent the thugs taking her away,” Miller told papers in the UK today. “There was nothing more that we could have done as we were overtly threatened by considerable physical force.”

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Bangladesh and Maldives have long shared histories, says Nasheed at national day celebrations

The High Commission of Bangladesh yesterday celebrated its national day, marking 40 years of independence, with a reception and dinner at Dharubaaruge.

Speaking at the ceremony, High Commissioner of Bangladesh to the Maldives, Rear Admiral Abu Saeed Mohamed Abdul Awal, observed that the Maldives recognised Bangladesh’s independence in 1972, “soon after our independence.”

Bangladesh was “keenly watching the democratisation process” in the Maldives, Awal said, “and it is gratifiying to watch the Maldives consolidate its democracy.”

Awal congratulated the Maldives for graduating from the UN’s definition of a Less Developed Country (LDC) to a Middle Income country, adding that this was one of Bangladesh’s goals and that it hoped to learn from the Maldivian experience.

“I hope the Maldives retains the advantages of being a LDC by using the climate change card effectively, so we can follow later,” Awal said.

Bangladesh was the world’s 21st fastest-growing economy with a US$90 billion economy, and was now the world’s fourth largest exporter of garments, he said. Even during the global recession Bangladesh had retained a growth rate of 5.5-6 percent, he added.

Acknowledging the large number of Bangladeshi expatriates working in the Maldives, Awal noted that worldwide, remittances from Bangladeshi expatriates contributed US$11 billion to the country’s economy.

“At the same time we are working very closely with the Maldivian government to ensure that expatriates can work under proper conditions. A memorandum of understanding (MoU) on manpower is in final stage, and the signing will bring the employment of expatriates under greater regulatory approval.”

President Mohamed Nasheed noted that the relationship between Bangladesh and the Maldives extended far into both country’s histories.

“As traders we have always had good contact with Bengalis,” Nasheed said.

“In recent times both our countries have become more strongly joined, not just through just SAARC, but through the immense contribution of Bangladeshi workers to our development efforts. We are thankful for the work done by the Bangladeshi community in the Maldives, and we strongly believe living conditions for migrant workers has to improve.”

Nasheed noted that Bangladesh had worked closely with the Maldives on issues and challenges relating to multilateral agency funding, adding that Bangladesh had very strong experience with the procurement proceedures of international donor agencies.

“Donor agencies funding mechanisms have their own cycles relating to their own administrative affairs, not to the development efforts of recipient countries,” he said. “This has been an issue very widely discussed in Bangladesh.”

South Asia, Nasheed said, “deserves much better. We are one of the fastest growing regions in the world, but very often a large number of people are left behind in development efforts.

“We want to see wider distribution of wealth as well as the provision of safe drinking water and electricity.”

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“Sunlight is the best antiseptic”: the case for an independent judiciary

The structure of the Judicial Services Commission (JSC) is compromising its accountability and obstructing the creation of an independent judiciary, says Professor Murray Kellam, a former Australian Supreme Court Justice who has spent several weeks observing the group.

The UNDP brought Kellam to the Maldives to observe the JSC based on a recommendation in a report by the International Commission of Jurists (ICJ) that suggested the commission be subjected to independent outside oversight.

As well as a former Justice of the Supreme Court of Victoria, Kellam is the current Chief Commissioner of the Tasmanian Anti-Corruption Commission and also has extensive experience assisting with the development of legal systems in countries such as Burma and Bangladesh.

He has also been appointed an Officer of the Order of Australia, an award given for distinguished service of a high degree to Australia or humanity at large.

“I think there’s a real problem when you’ve got members of both the executive and the legislative body administering judicial affairs,” Kellam said, on conclusion of his visit to the Maldives.

“You have the Speaker, Attorney General and an MP sitting in judgement on their own recommendations. That situation doesn’t need describing any further.”

Kellam said his observations were not intended to be critical of the members of the JSC, but rather to assist in the development of an independent and respected body.

In other countries it was usual for the Chief Justice to chair the body responsible for judicial accountability, but the members were made up of respected people from the community “rather than those allied to the executive or legislature.”

“The process in your Constitution here is that [in the event of] gross misconduct and gross incompetence, the Majlis (parliament) has the job of dismissing them, and that’s consistent with other places in the world. But the problem is that the body making the recommendation is also the membership.”

Kellam was provided with full access to the JSC’s meetings and files during his visit, however he acknowledged that language was a barrier – most significantly, the lack of official English translations of most legislation.

“The unofficial translation of the Constitution is pretty good, but I have doubts about the accuracy of the translation for the JSC Act. The UNDP assisted, but the [language gap] makes it pretty difficult.”

However, Kellam said that he agreed with the ICJ’s recommendation that parliament should evaluate the JSC “and ensure it operates more transparently.”

“There may be an argument that the appointments and complaints processes [for judges] should be separated,” he said. “At the moment it appears that the expectations of the authors of the constitution are not being met.”

There had been, he noted, a requirement for the JSC to undergo training, ”but that was removed by the Supreme Court and subsequently by the legislature.”

Urgent legislation required

Beyond a review and possible reform of the JSC by parliament, the Majlis needed to urgently pass a Criminal and Civil Code, a Penal Code, and an Evidence Act, as currently, “the courts have no guidance as to the exercise of their powers under the constitution.”

“These legislative enactments ensure consistency on the part of the courts and a proper legal basis for the process of litigation,” he said, adding that under the current circumstances, “I can’t see how the courts can operate. The importance of the legislature passing such legislation cannot be overstated.”

As for oversight, the parliament, he said, was entitled to take an interest in the functioning of the judiciary, as the courts were funded by public expenditure.

However, Kellam did mirror the concerns of the ICJ at the interference of the executive, and particularly, the “the extra-constitutional use of the Maldives National Defence Force and police and defiance of court orders.”

He noted the ICJ’s concerns over public statements of members of government meeting with judges and members of parliament imploring the President to ignore both the courts and the legislature: “Actions such as this brought Hitler to power,” he warned.

Judges needed to be able to make decisions contrary to interests of the executive, and should not be subject to pressure from the politically powerful, commercially powerful or any other specific social interest groups.

“I have in my own career made decisions the government was extremely unhappy with – but they did what they were told in due course, because that’s the way the rule of law operates.”

At the same time, “‘Rule of law’ does not mean ‘rule of judges’. Judges are not free to do as they wish. They are subject to the Constitution and the laws enacted by parliament. It is not their role to make disparaging
remarks about parties, witnesses who appear before them, or to send signals to society at large in order to intimidate and undermine other basic freedoms such as freedom of expression.

“Respect is not gained through coercive use of power. The judiciary earns respect by its performance and its conduct,” Kellam said.

Framework in place

The Maldives’ Constitution provided an excellent model for an independent judiciary, “much better than the ones in many countries I’ve worked in,” Kellam said.

“There was quite clearly a real endeavour to set up accountability mechanisms, such as the JSC, Anti-Corruption Commission (ACC) and provision for an independent prosecutor – a really significant step.

“But having a model is one thing, executing the plan is another. In the end that depends on the calibre and integrity of people who run these organisations. They need to set the gold standard in terms of behaviour, conduct and transparency.”

Paying judges generously was a significant part of the equation, he said, recalling a judge he met in Cambodia who drove taxis at night to avoid having to accept bribes.

Australia, he commented, had never had a judge convicted of bribery.

“Judges misbehave in Australia just like elsewhere, but we do not have corruption. I think that’s a reflection of accountability, but also a significant reflection of the fact that they are well-paid. As a judge in Australia you would have to be extremely silly [to accept a bribe], because the risk of losing your salary and all your pension entitlements is simply too high.”

Transparency trumps nepotism

In both his interview with Minivan News and a lecture held on completion of his visit to the Maldives, Kellam repeatedly emphasised the importance of independence.

It was not, he said, necessarily a obstacle to independence that the Maldives was a small country with myriad family, political and business connections.

“I chair the Anti-Corruption Commission in Tasmania, a state with a population of 500,000 people,” he said. “Many families have been living there a very long time, and everyone knows everyone else which is a reason why they brought an outsider like me to chair their Anti-Corruption Commission.

Transparency, he said, was the answer to the problem, and was as much a defence for those drafting contracts with those they knew as a means of mitigation corruption.

“There should be a declaration at the start of meetings, where interests should be stated,” he said.

“If you are awarding a contract to your brother-in-law, which can happen in Tasmania, it must be on the table. The person awarding contract should make the declaration. It must be a similar problem for judges in island courts here – judges here know the islanders, but you can’t have them disqualifying themselves.

“We have a jury system in Australia, and in a town with a population of 20,000 the jury will know all the victims and the witnesses. The important thing is that there is transparency and it is on the stable.

“Sunlight is the best antiseptic. The real problem of perception happens when these things are not out in the open – when they are done under the table, and somebody says ‘Hang on, he’s related or they had dinner the other week.’ If it is in public, decisions can be made impartially. If it’s disclosed you can look at the tender process and say ‘Not withstanding that this person is the uncle of the person delivering on the contract, on the face of it this is transparent.’ That’s entirely different to somebody awarding a contract to a relative behind closed doors.”

Rulings had to also be open to public scrutiny, and actively published and subjected to public analysis. Judges and their verdicts were open to scrutiny and criticism, Kellam said, and in Australia it was understood that judges did not pursue cases of defamation against them.

The economic case for justice

An impartial judicial system was a key factor in encouraging foreign investment, Kellam said, and could have a direct and significant impact on the economy.

This was something that Singapore recognised 15 years ago, he said.

“They understood the value of a civil system that is incorruptible and competent. They spent a lot of money on their judiciary and Transparency International now rates their civil legal system as one of the best in the world.

“Singapore realised that one of the best ways to attract investment was to have a system whereby international investors knew they would get a fair go in domestic courts. If you look at the circumstances in other parts of the world where investors have no confidence in the judiciary, that deters investment and takes it offshore. They’ll go somewhere else.

Citing Adam Smith, considered one of the founders of modern capitalism, Kellam observed that “Commerce and manufacturers can seldom flourish long in any state which does not enjoy a regular administration of justice, in which people do not feel themselves secure in possession of their property, in which the faith of contracts is not supported by law.”

As a foreign investor, Kellam said, “you want to know that contact you enter into with domestic partners will be understood and enforced by courts if there is a breach. You want courts to judge you impartially – you don’t want to be discriminated against because you are a foreigner.”

“Secondly, it’s no good getting judgement if no there is enforcement – which is a major factor in developing countries. Sure you can get a judgement, but it’s not worth the paper it’s written on because there is no process for getting it enforced, and you can’t turn judgements into anything productive.”

Singapore had recognised this, and become not only a hub for foreign investment but also a regional hub for commercial arbitration.

“People from around the region will use Singapore as a place of law and business,” Kellam observed.

“The constitution sets up [an independent judiciary] for principled reasons. But there are not only good arguments for these in terms of principle, there are very good economic arguments. But the judges have got to understand that, and they’ve got to build it.”

Perhaps tellingly, President’s Member of the JSC Aishath Velezinee observed on her blog that “not a single member of the Judicial Service Commission (except for myself) or staff attended Professor Kellum’s lecture.

“What cannot be ignored is that neither the JSC nor the judges have the willingness and interest or the knowledge and capacity to reform the judiciary in accordance with the Constitution, despite the rhetoric.”

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180 days later: GMR at the helm of Male’ International Airport

Rising prices for aviation fuel and increased ground handling charges made by GMR, the Indian infrastructure giant that is now managing and developing Male’ International Airport, are in line with international prices, the airport’s CEO Andrew Harrison has told Minivan News.

The price of fuel at the airport has increased 35.39 percent at the airport and 35.67 percent internationally, Harrison said, in an update on progress at the airport during an initial 180 day strategy period following the company taking the reins.

“We are not even passing over the full increase in prices of fuel – we’re sensitive to airline customers and what the price of fuel means to them,” Harrison said. “The escalating price is affecting the whole global economy, and affects airlines directly not just here but at all other locations.”

Harrison sought to head off concerns aired recently that the cost of fuel at Male’ International Airport was impacting airlines’ willingness to fly to the destination.

“No airline has come forward and said they are unhappy with our pricing, but they are concerned about the global price of fuel,” he said. “With all the volatility there are challenges there.”

“We are working on some strategies to reduce the cost of providing fuel to them. We’ve spent the last six weeks meeting airlines – some want credit terms, others a set supply criteria – we are trying to meet the need of the majority.”

“The pricing of fuel is not something we compare one place to another, because there are many variables including the method of delivery and the volume you’re buying. The size of the berth we have limits the size of vessel we can charter, and these factors affect the price we can buy and supply fuel at.”

GMR had signed a US$140 million contract with the State Trading Organisation (STO) to supply fuel, he added, switching the contract over from Dubai-based Galana Petroleum.

“Our sense was it was better to use a company right here with us that would share in the risk and opportunity and try to get us the best possible price – for instance, the STO has its own vessel, and may not need to charter one. They made an extremely competitive bid.”

Many airlines, he explained, used a middleman reseller who bought fuel and sold it by offering components such as credit terms.

“Resellers may be in a better position to do that, as we are not a company in the business of providing credit terms to airlines. But what we are saying is that because the airline is our direct customer we prefer a direct relationship with them.”

This had led, Harrison said, “to a number of airlines leaving intermediaries and coming to us directly. They have a choice – but they are coming to us.”

Ground handling spikes

GMR has significantly increased ground-handling charges to bring the price in line with other international airports, Harrison said.

The ground-handling charge for a B777, used by many airlines flying to Male’, was recently raised from US$1990 to US$2985 ( at daytime) and US$3585 ( at night) – an increase of over 50 percent.

“It’s not necessarily unreasonable or overpriced –  it may seem like a jump but there’s been no increase in 12 years, and we are still more competitive than a number of international markets,” he claimed, noting that the comparable cost in an Australian airport was US$4286 and US$4388 in Europe.

Most other services, such as the provision of ground power, were either cheaper than comparable rates in India or included – airports such as Hyderbad charge airlines for services such as the provision of wheelchairs, or use of a scissor-lift for people unable to climb the stairs to the plane.

Free storage of airline baggage containers had actually resulted in the airport being inundated, “but instead of charging we are asking airlines to reduce them to realistic levels.”

Ground-handling charges were less that four percent of an airline’s operating cost, he noted, “but that doesn’t mean we want the issue to escalate.”

Corruption allegations

Despite persistent allegations from opposition parties that there was corruption in the airport bidding process, including several cases forwarded to the Anti-Corruption Commission which vowed to investigate, “we have not been approached by the ACC,” Harrison said.

“There has been no formal communication [with the ACC], and we are extremely confident of standing up to any scrutiny because of the way the bid was scrutinised by the World Bank’s International Finance Corporation (IFC).

“They been here recently as part of their due-diligence process, meeting members of the public, ministers and stakeholders, and holding a community meeting in Hulhumale’ about the impact of the development. They wouldn’t be here doing that if they felt they were part of something that had not been done properly. We are confident that irrespective of what is being discussed in the media that we followed a legal and due process that was transparent and respected.”

There were, he acknowledged, “people who believe in what we doing, people who feel they haven’t seen sufficient evidence of what we’re doing, and people who will never be convinced no matter what we do.”

Cultural construction

The first 180 days, Harrison explained, had been spent merging the cultures of the three organisations now operated under GMR Male’ International Airport – the former Maldives Airport Company Limited (MACL), Island Aviation’s passenger check-in and passenger handing operation, MIC’s interior cleaning, “as well as GMR’s culture.”

The company’s organisational structure had been unveiled with an emphasis on staff training, involvement in decision making and addressing issues such as a noticeable gender imbalance.

“We found a gender imbalance in the workplace – there were not many ladies operating at levels where they had significant levels of responsibility,” Harrison observed. “So we tried to address this – the new Head of IT Operations is a very qualified lady who is very good at her job, but she was many levels below and wasn’t being allowed to operate at a level that matched her potential.”

GMR was making an effort to communicate in both Dhivehi and English, he said, launching Dhivehi language classes for non-Maldivians and producing documents in both languages.

Staff suggestions and involvement had led to the creation of a non-punitive safety system, encouraging reporting rather than punishment, upgrade of the airport’s sea rescue capabilities and the replacement of 350 unbranded assembled computers with a consistent Dell IT infrastructure – and paid software licences.

Glitches in communication emerged as well – GMR took a dim view at the beginning of March when security staff began conducting pat down searches of every passenger trying to enter the terminal.

“A pat-down check is more efficient when people are experienced, but not when you introduce it on a peak morning with queues all the way down to the seaplane check in area, with no notification to the airlines or us,” Harrison said. “As a result of that we had unprecedented delays – nearly every flight that morning was delayed. Security took a line that nothing new was introduced, but after an emergency meeting the pat downs were stopped and the queues disappeared.”

He was, he said, happy to look at industry best practice and whatever technology was required, “but [I] am not prepared to introduce something not in line with international standards. Heathrow and Gatwick search 25 percent of those who don’t set off the alarm. Here we were searching 100 percent.”

CEO Andrew Harrison (left) at the airport handover

Physical infrastructure

Harrison was very conscious of public expectations regarding the airport upgrade – following the release of artist impressions of the airport, GMR has kept a low profile while introducing its organisational structure and attempting to win over staff to its nearly US$400 million vision for the airport.

Managing such expectations had been one of the key challenges, he said: “A lot of people felt there would be changes to the terminal the day we took over – but there have been many considerations, such as impact of work in peak periods, and understanding what work we want to do.”

Many physical improvements were scheduled to begin as the Maldives leaves peak travel season: “We weren’t in a position to remove even a single baggage carousel,” Harrison said.

GMR has a lot of work ahead of it if it plans to meet its target of upgrading the existing terminal by October.  The refurbishment is “essentially throw-away” considering it will have  less than a three year lifespan until the new terminal is completed in 2014.

During a tour of the present airport terminal Harrison provided a running commentary of planned improvements – including a food court (selling, among other foodstuffs, Turkish kebabs – a Male’ first) and raising the ceiling of the arrivals area so tourists could see the sea from the gate.

Harrison admitted that the scale of investment in the upgrade made it tempting to just bring forward the date of the new terminal, however he acknowledged the local appetite to see quick improvements.

“People will see changes in the coming months. For example, we’re about to start work on the domestic terminal, increasing the space available by 50 percent. This falls outside the concession agreement, which mostly concerns international travellers – but a lot of domestic passengers are Maldivian and deserve to benefit from the improvements as well.”

Other improvements will include redesigned and standardised tourist counters that are branded individually by resorts, a left luggage service, baggage wrapping service (“this is popular for a number of destinations, especially Eastern Europe”), porter service (“people particularly from the Middle East want the services of paid porters”), ‘fast-track’ immigration and customs as well as the potential for a ‘premium’ jetty.

There will also soon be a spa in the departure area offering 20 minute shoulder and foot massages, and possibly a nap and shower facility. Moreover, ‘soft skills’ trainers loaned from Singapore Airlines, “some of the best in the world”, had been invited to help train front-of-house staff at the airport.

Following construction of the new terminal, Harrison said the goal was to turn Male’ into one of the top five airports in the 1-5 million passenger category (the airport presently sees 2.4 million visitors through its gates a year).

“Look at the kind of experience a tourist coming to the Maldives goes through,” he said. “The natural beauty of the resort environment, and then the airport experience they go through at the end – it’s not right, standing in extensive queues, with a level of service so far apart from that of the resorts.”

Economy and marketing

Asked whether GMR had concerns about operating in the Maldives given the state of the country’s economy, Harrison said he believed the improved airport itself was part of the solution.

“An airport is an economic engine for a country,” he explained, “allowing trade, travel – both passenger and cargo – and employment. If the processes are made efficient, it has positive impact on the economy.”

Moreover, GMR’s involvement provided resources and expertise in opening up new tourism markets for the Maldives, Harrison explained, particularly undeveloped markets such as the United States.

“We want to talk to resorts, the Ministry of Tourism and the airlines about possibly marketing the Maldives in the US,” Harrison said.

“The US is the most underrepresented market in terms of direct tourism, however 14 percent – the highest single percentage – of tourists arriving coming into Delhi hold US passports. If they are willing to fly to India it’s only a short hop to the Maldives – I think it’s a matter of awareness and understanding connectivity and flight options, and most importantly, what’s here at end of the journey.”

The Maldives, he said, represented a “more interesting prospect” than traditional nearby island destinations visited by US tourists, such as the Bahamas and the Caribbean, adding that GMR was keen to explore this untapped market.

“We didn’t go to ITB [the recent travel industry trade show held in Berlin] this year because we didn’t think we had anything to say and I didn’t really want it to just be a jolly,” Harrison said. “But next year we’ll have a stand showcasing what we are doing here.”

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20 year-old man found dead after attempted robbery of Baros Island Resort

One person is dead after an attempted robbery of Baros Island Resort and Spa early this morning, after a group of Maldivians arrived in a boat and were confronted by staff.

Police spokesperson Sub-Inspector Ahmed Ali confirmed that police were called around 4:00am this morning and are investigating the incident.

“A group of people went to the island and had a confrontation with staff. Staff at the resort held the suspects,” he said, confirming that they were Maldivian nationals. “When police arrived there was a body in front of the jetty.”

Sub-Inspector Ali declined to provide further details until the conclusion of the investigation.

General Manager of Baros, Jonathan Blitz, said the resort could not comment on the matter as it was under police investigation.

Minivan News understands that the deceased is 20 year-old Ali ‘Immortal’ Shafiu.

According to sources familiar with the incident, Shafiu was among a group of four masked men who arrived on the island at 3:30am.

He allegedly drowned while attempting to escape in one of the resort’s vessels, after security staff spotted the intruders.

One of the suspects was apprehended by resort staff, while the remaining two were arrested by police when they were found hiding in a resort boat in the lagoon.

It is not known if the men were armed, however no staff member or guest on the island was harmed during the incident, Minivan News was told.

Friends of the victim in Male’ who were present when the body was brought to hospital claimed Shafiu was dead when he was pulled from the water. The body appeared to have three head wounds, one of them “one and a half inches deep”, the source claimed.

The three remaining men are now under police custody.

Baros is the second Maldivian resort this year to suffer an attempted robbery by people from outside the island.

In Janurary, staff at Kihaadhuffaru in Baa Atoll were threatened by a group of masked men brandishing machetes and swords, who escaped in a dingy with the resort’s safe.

A receptionist was reportedly gagged with tape and restrained with a cable tie during the incident.

Sub-Inspector Ahmed Shiyam said at the time that he did not believe resorts would need to review existing security measures in light of the Kihaadhuffaru theft.

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Etihad Airways to launch daily flights Male’-Abu Dhabi

Etihad Airways has said it will launch daily return flights between Male’ and Abu Dhabi from November 1, using Airbus A320 aircraft.

The airline’s Chief Executive Officer James Hogan said that strong visitor numbers in the premium resort destination had prompted the airline to introduce the new route, subject to government approval, to coincide with the start of the busy European winter season.

“We expect the services will appeal to UAE leisure travellers, as well as customers from our major European markets, particularly with the strong connectivity options on offer and following the additional frequencies that will come online on a number of our key European routes this summer,” he said.

Overnight flights in both directions would allow travellers an extra day in the Maldives, he said.

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