Category: Business & Tourism

Maldives business news

Housing minister hopes to sign amended TATA contract next week

Minister of Housing and Infrastructure Dr Mohamed Muiz has expressed hope that the amended contract with Indian infrastructure giant TATA Housing regarding the construction of two apartment complexes can be signed next week.

“Based on the most recent communication, we estimate that the amended contract will be signed next week, that is if no further reasons for delays come up,” Muiz told local media.

He stated that the company was expected to commence work on the two sites within a period of 45 days after the signing of the contract, and to complete the projects within a year.

The deal – first signed in 2010 – has faced repeated delays after successive governments sought amendments to the original contract.

“In addition to this project, there is also work on an additional 150 flats that need to be started,” Muizzu said yesterday.

The minister explained that previous delays in signing the agreement had occurred due to the actions of TATA Housing.

After deliberation by the cabinet’s economic council in July, the Housing Ministry had announced intentions of resuming the projects under a revised contract.

The government of Maldives contracted Apex Realty Pvt Ltd – a joint venture between TATA Housing Development and SG 18 Realty – to construct residential apartment complexes on four separate sites in capital Malé city in May 2010.

Work commenced on the Gaakoshi site and former Arabiyya School premises, but was later halted due to pending resolution of numerous contractual issues.

While reasons suggested for the delay included shortages in construction materials and the incumbent government’s reclamation of land plots included in the original deal, TATA was reported in Indian media as expressing concern that local politics were endangering their investments.

Apex Realty also released a press statement in May 2014 indicating its intention to commence work on the apartment complexes within 45 days of getting the final approval from the government of Maldives for the amended contract.

“We are committed to the Maldives project and can start the project within 45 days after the final nod is received from the Housing Ministry and contract amendment is signed,” Apex Realty Director Sandeep Ahuja stated at the time.

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Dr Shakeela alleges conspiracy to drive her from office

Former health minister Dr Mariyam Shakeela has suggested her removal from office was the result of a conspiracy which included death threats and a smear campaign.

Giving an interview to local newspaper Haveeru, Shakeela alleges that she was ousted in order to clear the way for corruption within the health sector.

“When I was given the post, some people said this can’t be done by bringing in someone from far outside after we worked hard to bring this government,” she told Haveeru.

“So from the start there were some people who were bent on showing that I was a failure,” she continued.

Shakeela told the paper that she had received multiple threatening phone calls – including eight in a single evening, suggesting she would be killed if she did not resign.

Dr Shakeela’s reappointment in the redefined role of health minister was overwhelmingly rejected by the pro-government majority People’s Majlis last month.

Parliamentary group leader for the ruling Progressive Party of Maldives (PPM), Ahmed Nihan, has told Minivan News today that Shakeela’s removal was a democratic decision made by the parliamentary group.

“I cannot accept her claims in that regard, and cannot verify whether this is the case [of threats] or not,” said Nihan.

The Villimalé MP said that rejection of Shakeela by the parliamentary group after her nomination by the president sent a strong signal to ministers.

“If we [MPs] decide to give another year to Shakeela and wait for a whole year, who will be blamed?” he asked.

The President’s Office today said that it did not wish to comment on the interview, nor the allegations of death threats sent to the former cabinet minister.

Threats to politicians have become increasingly common in recent months, with Jumhooree Party leader Gasim Ibrahim alleging fellow politicians were behind these attempts at intimidation.

Corruption allegations

Dr Shakeela, speaking while attending a conference in Bhutan, said that political opponents intended to utilise the position to benefit from large scale corruption in the health sector.

“I am not talking about small amounts [of money]. For example, because of the state of disrepair of infrastructure, about MVR500,000 has to be spent at least to build even one place. In most places, it goes above a million,” she explained.

“So consider the profit people could make. They could give it to whoever they want. They could do whatever they want to purchase equipment. I tried to do it without allowing any of that.”

Dr Shakeela – who served as environment and energy minister under the previous government – also alleged that negative media coverage of the health sector was part of wider efforts to engineer her removal.

A series of protests over regional healthcare services came soon after it was revealed state-owned Indira Gandhi Memorial Hospital (IGMH) had transfused HIV positive blood to a patient in February due to an alleged technical error.

In June, Fuvahmulah councillors called for Shakeela’s resignation after a case of stillbirth, an interrupted caesarean, and the death of a soldier on the island. A few weeks later, over 300 protestors demonstrated in Haa Dhaal Kulhudhuffushi over deteriorating conditions at the regional hospital.

Shakeela was up for parliamentary approval in August for the second time during President Abdulla Yameen’s administration after her initial portfolio as minister of health and gender was modified.

While Shakeela told Haveeru that she was not given adequate authority to carry out her job,  PPM parliamentary leader Nihan today said that acting health minister Colonel (Ret.) Mohamed Nazim was now doing a “tremendous” job.

“I’m sure that the work of the acting Health Minister is commendable, work that Shakeela could not have done – I’m quite sure of that,” said Nihan.

Drawing parallels with the work of former health minister Ilyas Ibrahim – brother-in-law of former President Maumoon Abdul Gayoom – Nihan argued that the sector had needed a more proactive minister.

Nihan suggested that the money allocated to the health sector in the past two budgets had been generous, a point previously disputed by both Shakeela and Permanent Secretary at the health ministry Geela Ali

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Maldives strategically unprepared for SEZs, argues former Finance Minister Inaz

The Maldives is strategically unprepared for the negative consequences of creating special economic zones (SEZs), former Finance Minister Ahmed Inaz has warned.

In an opinion piece published on newspaper Haveeru last week, Inaz argued that SEZs could worsen income inequality, deprive local councils of sources of revenue, and lead to a large influx of foreign labour.

“If [the government] wants to create special economic zones, it should prioritise solving problems in the judiciary that the entire country is concerned about as well as the budget deficit,” he wrote.

Policies concerning the SEZs should be formulated with a long term plan that looks ahead 10 to 20 years into the future, Inaz advised.

Investor confidence should be secured, he continued, for which laws needed to be reviewed through political dialogue.

Speaking at a forum on SEZs last week, Maldives Monetary Authority Governor Dr Azeema Adam also cautioned that political consensus was necessary for SEZs to be successful and stressed the importance of a long term strategic plan.

President Abdulla Yameen ratified the SEZ Act on September 1, which he has said would “transform” the economy through diversification, whilst relaxed regulations and tax concessions were necessary to attract foreign investors and launch ‘mega projects’ to mitigate the reliance on the tourism industry.

Inaz meanwhile predicted that a population of foreign workers many times the size of the local population would be created with the development of SEZs.

“Problems (social, political and economic) as well as opportunities that could arise as a result of the [expatriate] population should be weighed academically and discussed and debated,” he advised.

Inaz served as finance minister during the administration of former President Mohamed Nasheed and oversaw the enactment of tax reforms in 2011.

After leaving the Maldivian Democratic Party in February 2012, Inaz told Minivan News he would “always remain independent and serving the national interest.”

Consequences of SEZs

Unlike China and other East Asian countries where SEZs were created about 50 years ago, Inaz observed that the Maldives has never been a “closed economy.”

A large and cheap labour force and rich natural resources contributed to China’s economic success, he noted.

However, he added, social scientists believe that industrial development came at the cost of social cohesion.

Moreover, large multinational companies exert undue influence over decision-making in China and other East Asian nations, Inaz suggested.

While a free market economic policy has always been pursued in the Maldives, “with the designation of separate economic zones, other regions of the Maldives would be closed economically,” Inaz wrote.

Inaz argued that policies enacted in China to integrate its economy with a globalised world were unsuited to the Maldives.

In addition to establishing infrastructure such as airports, utilities and transport networks, Inaz observed that China trained skilled workers such as engineers, accountants, and lawyers years in advance.

“The question is whether there are nearly enough Maldivians with good work ethics who would be inexpensive (compared to neighbouring countries)?” he asked.

Social and economic problems created as a result of not regulating migrant workers during the past 15 years could increase manifold with SEZs, Inaz warned.

If Maldivians were unprepared for new jobs, Inaz predicted that wages could also be adversely affected in the domestic job market.

Inequality

One of the biggest challenges facing the Maldives was income inequality and the small size of the middle class, Inaz continued, which was most evident in the regional disparities between the capital and outer atolls.

Inaz stressed that empowering local councils to generate income by utilising land and lagoons was necessary to reduce disparities.

While social security benefits reduces the income gap, Inaz warned of the negative impact on government revenue of tax exemptions for investors in SEZs.

China and Singapore created SEZs after putting the state’s fiscal affairs on a sustainable footing, he noted.

The value of the Maldivian currency deteriorated as a result of persistent budget deficits since 2004, Inaz observed, which forced the state to print money to finance deficit spending.

Consequently, the interest rate on treasury bills was now nine percent, he noted, which restricts opportunities for local businesses to partner with foreign investors in the SEZs.

“It would be unwise to establish [SEZs] without easing the burden placed on Maldivian businesses by the budget deficit and T-bill rates,” he advised.

If SEZs are created with the fiscal status quo unchanged, Inaz suggested that the government would lose sources of revenue from taxes and lease rent.

The government’s position in negotiations with potential investors would also be weak, he contended.

Inaz further argued that successive governments had been unable to improve provision of services due to a weak system of governance.

“With this reality and serious challenges, what high ground would we climb for safety from the big waves formed by opening up the whole country through a special economic zones law?” he asked.

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Tourism Minister Adeeb appointed chairman of SEZ investment board

President Abdulla Yameen has appointed Tourism Minister Ahmed Adeeb as the chairman of the board of investment created last week under the Special Economic Zone (SEZ) Act.

Along with Economic Development Minister Mohamed Saeed as vice chairman, the rest of the members are Fisheries and Agriculture Minister Dr Mohamed Shainee, Environment and Energy Minister Thoriq Ibrahim, and Youth and Sports Minister Mohamed Maleeh Jamal.

The five-member board is authorised to grant approval for applications by developers to establish a zone, issue permits and investment licenses, and formulate rules and policies for the operation of SEZs.

Additionally, the board would monitor and review progress of investments, assess risk damage and liability, determine rates of fees and charges, and sign investment agreements between the government and developers.

The board would be assisted by a 17-member technical committee comprised of government officials as well as representatives from the private sector.

Following criticism from the opposition over the appointment of ministers to the board – who contended it was unconstitutional – President’s Office Spokesperson Ibrahim Muaz Ali put out a press statement yesterday (September 6) insisting that the board was instituted in line with laws and regulations.

Article 136(a) of the Constitution states, “A member of the cabinet shall not hold any other public office or office of profit, actively engage in a business or in the practice of any profession, or any other income generating employment, be employed by any person, buy or lease any property belonging to the state, or have a financial interest in any transaction between the state and another party.”

However, unlike boards of state-owned enterprises, Muaz stressed that the ministers on the board would not receive any form of remuneration, noting that it was “a governing board”.

“Therefore, the Maldivian government condemns misleading statements from some politicians made for different political purposes concerning the president forming the board of investment and appointing members,” read the press release.

SEZs

Under the SEZ Act, each zone would be granted to a developer – following evaluation of a proposal – to take overall responsibility for management and operation. Once a permit is granted, finding and choosing investors is left to the developer.

The investor would then be issued a license once the developer submits its agreement with the investor to the board.

The investment agreement signed between the board and the developer would include details of the investment, its value, proposed business activities, details of incentives, compensation formula, dispute resolution mechanisms, rights and obligations of the developer, as well as other terms and conditions.

Speaking at a forum on state broadcaster Television Maldives (TVM) last week, Adeeb said the SEZ law allows the government to offer incentives and “for the first time” negotiate directly with investors, who preferred “a one-stop solution” for applications, permits and licenses.

While US$5 billion has been invested in tourism since 1972, Adeeb suggested that even if one ‘mega project’ such as iHavan “takes off” with more than US$1 billion worth of investment, the economy would be transformed.

The iHavan or ‘Ihavandhippolhu Integrated Development Project’ envisions an international shipping and commercial hub with a container transhipment port, bulk-breaking and warehousing, oil storage and bunkering facilities, an international airport, a cruise liner terminal, a yacht marina, real estate development and ‘vertical’ tourism services.

The project aims to take advantage of the strategic location of the Maldives’ northernmost atoll on a major shipping route – through which more than 700,000 ships carry goods worth US$18 trillion a year – and develop 5,700 hectares of land along with deep natural harbours.

Opposition leader Mohamed Nasheed has, however, dismissed SEZs and the touted mega projects as “castles in the air” whilst his Maldivian Democratic Party (MDP) has warned that the law would pave the way for money laundering and other criminal enterprises, undermine local councils, and authorise the president to “openly sell off the country” without parliamentary oversight.

Speaking at the forum, MDP MP Fayyaz Ismail said large investments could not be secured while foreign businesses did not have confidence in the judiciary.

Fayyaz argued that the SEZ law lacked provisions for oversight and adequate legal protection for investors as well as controls for the inflow and outflow of money, relying solely on the benevolence and integrity of the government.

Addressing allegations concerning criminal enterprises and gambling in SEZs, Adeeb referred to President Yameen’s assurance that investments would not pose a threat to either Islam or Maldivian sovereignty.

“We don’t sell our daughters or women, do we? A clean tourism has been introduced in the Maldives without any prostitution,” he said.

If sound policies to favour local contractors and create jobs for youth are implemented, Adeeb suggested that investors could be brought in while “protecting our religion and traditions.”

“I don’t think gangs or black money are created by a law. It is done outside the law,” he said.

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Political consensus necessary for success of SEZs, cautions MMA governor

Political consensus is necessary for special economic zones (SEZs) to be successful and beneficial to the nation, Maldives Monetary Authority (MMA) Governor Dr Azeema Adam has cautioned.

Speaking at a forum on state broadcaster Television Maldives (TVM) last night, Dr Azeema said one of the most important prerequisites for successful enactment of the SEZ Act was stability and consensus “on a political and national level.”

“If SEZ becomes caught up in political waves, it will not bear fruit,” she warned.

“Political confrontations must come to an end for investors to come to the country, to ensure investor confidence, and for jobs to be created for Maldivians.”

Political disputes should be resolved through “constructive, meaningful and academic debates,” she advised.

President Abdulla Yameen ratified the SEZ Act on Monday (September 1), which he has said would be a “landmark law” that would “transform” the economy through diversification and mitigate the reliance on the tourism industry.

The government has maintained that SEZs with relaxed regulations and tax concessions were necessary to attract foreign investors and launch ‘mega projects’ for economic diversification.

Opposition leader Mohamed Nasheed has, however, dismissed SEZs and the touted mega projects as “castles in the air” whilst his Maldivian Democratic Party (MDP) warned that the law would pave the way for money laundering and other criminal enterprises, undermine local councils, and authorise the president to “openly sell off the country” without parliamentary oversight.

Longterm plan

Dr Azeema went on to stay that SEZs should create wealth and employment opportunities for Maldivians.

School leavers and university graduates should have the necessary skills when they enter the job market, she added, noting that a high employment rate was required for sustainable growth.

Citing International Labour Organisation (ILO) figures, Azeema said over 3,500 zones of varying sizes have been created in 130 countries.

“Economists agree that special economic zones play a very important role in the economic development of a country. It is known that at least 40 million people work in such zones,” she said.

Studies have shown that SEZs increase national productivity and income, she continued, and the zones contribute at least US$200 billion worth of exports worldwide.

However, she stressed that a longterm plan and strategies – which “should be transparent to investors and the public” – would be needed for SEZs to be successful.

While SEZs have been beneficial in some countries, “the results have not been so good” in others, she noted.

She added that SEZs in Singapore and China created in the 1960s and 1970s, respectively, took foresight and years to become successful.

Forum

At last night’s forum – organised jointly by the Maldives Broadcasting Corporation and the Maldives National University business school’s student association – MDP MP Fayyaz Ismail said large investments could not be secured while foreign businesses did not have confidence in the judiciary.

Fayyaz argued that the SEZ law lacked provisions for oversight and adequate legal protection for investors, relying solely on the benevolence and integrity of the government.

Tourism Minister Ahmed Adeeb – co-chair of the economic council – said the law was designed to attract investments beyond the ‘seaplane zone’ close to Malé’s international airport.

Under the existing tourism law, a flat rate of US$8 per square meter was charged for development of tourist resorts, Adeeb explained, which led to investors choosing uninhabited islands closer to the capital.

The SEZ Act combines the government’s policies on population consolidation and foreign investments to expand the economy and develop infrastructure in the north and south, Adeeb said.

Economic Development Minister Mohamed Saeed said SEZs were “tried and tested” in many countries, including small island states in the caribbean, which had a thriving banking sector.

“A zone is created to establish infrastructure that we don’t have through foreign funds,” he said.

Referring to the the iHavan transhipment port project, Saeed said the Maldives could capitalise on its strategic location and the “trillions of dollars” worth of trade that passes through the seven degree channel.

Saeed explained that the Ihavandhippolhu integrated development project would include offshore docking, bunkering facilities, an export processing zone, real estate businesses, and non-convention tourism facilities.

He noted that the development of Singapore’s port saw establishment of banks, a hotel industry, and other subsidiary services.

Adeeb stressed that the SEZ law allows the government to offer incentives and “for the first time” negotiate directly with investors, who preferred “a one-stop solution” for applications, permits and licenses.

While US$5 billion has been invested in tourism since 1972, Adeeb suggested that even if one project such as iHavan “takes off” with US$1.3 billion worth of investment, the economy would be transformed through multiplier effects.

Mohamed Ali Janah, former president of the Maldives Association of Construction Industry, meanwhile said emulation of the SEZ model implemented in the Caribbean and the ‘tiger’ economies of East Asia could take the Maldivian economy to “the next level”.

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Government expenditure rose 58 percent in June, reveals MMA

Government spending in June rose 58 percent compared to the same period in 2013, the Maldives Monetary Authority’s (MMA) monthly economic review for July 2014 has revealed.

Total expenditure, excluding net lending, “amounted to MVR1.6 billion (US$103 million) in June 2014,” stated the report released on Sunday (August 31).

Total government revenue, excluding grants, meanwhile rose four percent in annual terms and reached MVR0.9 billion (US$58 million).

“The increase in total revenue during June 2014 was largely due to the 57 percent growth in import duty and the 9 percent increase in total goods and services tax,” the central bank explained.

“Meanwhile, non-tax revenue registered a decline owing to the 18 percent decline in resort lease rent. As for the increase in expenditure, it was mainly due to the 30 percent increase in current expenditure.”

Budget deficit

In early August, Finance Minister Abdulla Jihad revealed that the government was facing “great difficulty in managing the budget deficit” due to shortfalls in revenue.

The ballooning budget deficit – which Jihad warned could reach MVR4 billion (US$260 million) or 10.6 percent of GDP – could affect the government’s ability to pay civil servants, he said.

A fiscal deficit of MVR1.3 million (US$84,306) had been projected in the record MVR17.96 billion (US$1.1 billion) budget approved by parliament.

The budget was inclusive of proposed revenue raising measures – many of which had failed to materialise during the previous administration – amounting to MVR3.4 billion (US$220 million), or 19 percent of the budget.

“Expenses keep on increasing, even as we don’t receive any revenue. We did not get the expected revenue this year either,” Jihad said last month.

Despite parliament passing the measures in February – including tax and import duty hikes – Jihad predicted at the time that the anticipated revenue might not be realised in full due to compromises.

“We try to make regular salary payments even if we have to take loans in order to do so,” Jihad said.

The monthly review revealed that the total outstanding stock of government securities – treasury bills and bonds – increased 18 percent in July compared to the corresponding period last year, reaching MVR13.7 billion (US$888 million).

“The annual growth in government securities was contributed by the increase in the amount of T-bills issued by the government to manage its growing cash flow requirements,” the review explained.

The MMA had previously warned that shortfalls in revenue and overruns in expenditure could jeopardise the country’s debt sustainability.

In May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the untargeted subsidies” – and increasing revenue.

Tourism, fisheries and inflation

Tourist arrivals in July increased 20 percent from the previous month and 14 percent compared to July 2013, reaching 100,191 visitors, the review noted.

While bednights rose by nine percent in annual terms, the report noted that average duration of stay declined from 6.0 days in July last year to 5.7 days this year.

“With the increase in bednights, the occupancy rate also rose to 69 percent in July 2014 from 66 percent in the same period last year,” the review stated.

Fish purchases meanwhile declined by 44 percent to 2,124.7 metric tonnes compared to July 2013, the report revealed.

While the volume of fish exports fell by 54 percent, earnings on fish exports declined by 41 percent, which was “contributed mainly by the fall in export of frozen yellow fin tuna.”

The rate of inflation in the capital decreased to 2.4 percent from 3.5 percent in July 2013 and 3.6 percent the previous year, the review found, which was due to “the slower growth of food prices, especially fish, and the moderation in the growth in prices charged for rent and health services.”

The review noted that the trade deficit widened by 38 percent in July compared to the same period last year “due to the 27 percent increase in imports and the 34 percent decline in exports.”

Gross international reserves rose four percent from the previous month and 42 percent in annual terms, the review stated, amounting to US$497.6 million at the end of July.

“This mainly reflects the temporary increase in foreign currency transfers by the commercial banks in the review period,” the central bank explained.

“As for reserves in terms of months of imports, it also increased in both monthly and annual terms and stood at 3.2 months during the review month.”

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PPM celebrates SEZ bill with fireworks

The ruling Progressive Party of the Maldives (PPM) celebrated the passage of President Abdulla Yameen’s flagship Special Economic Zone (SEZ) bill with fireworks and a music show on Friday night (August 29).

The ‘Development Certain – SEZ for the atolls’ celebration at Malé’s Alimas Carnival saw PPM MPs heap praise on President Yameen and Tourism Minister Ahmed Adeeb. MPs hailed Yameen as an economic expert and a president for the youth.

The SEZ bill “would bring unparalleled development” to the Maldives and accelerate development of the country’s rural atolls, MPs said. The SEZ bill, passed under PPM’s mantra ‘Economy, Youth, Hope,’ would usher in a prosperous future, the PPM said.

MPs also celebrated what it called a “war” against opposition Maldivian Democratic Party in passing the bill. The opposition had proposed over 180 of the 245 amendments to the bill at an extended sitting on Thursday. However, the bill passed with only six minor amendments, which had been proposed by the ruling party.

At the ceremony, Speaker Abdulla Maseeh and PPM parliamentary group leader Ahmed Nihan handed over a copy of the bill to President Yameen.

MDP contends the SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralisation system, and authorise a board formed by the president to “openly sell off the country” without parliamentary oversight.

The government, however, maintains that SEZs with relaxed regulations and tax incentives were necessary for foreign investors to choose the Maldives over other developing nations and to launch ‘mega projects,’ including the I-Havan free port in northern Haa Alif atoll.

SEZ for the atolls

Tourism Minister Ahmed Adeeb, who spearheaded the drafting of the SEZ law, said benefits and tax breaks in the legislation would attract multi-million dollar investments and will bring benefits to all citizens.

“As I stand here, I see a very prosperous future. I know, in the past two years numerous investors have come wanting to invest in the Maldives. They ask, why should we go to Haa Alif? Why should we go to Addu Atoll? What’s so special there? There are islands and lagoons near Malé, why should we invest in the Malé region, build guesthouses here? That is true, before this, the government did not have any special offers on negotiation, such as designating special economic zones. But today, we have special offers on hand,” he said.

California had competed with other American states to attract car manufacturer Toyota with free water and electricity, he said. But investors in the Maldives have to establish water, electricity, and sewerage systems before they could make investments, he said.

He went on to dismiss opposition concerns over the legislation, including the proliferation of gangs and criminal activity, he said.

“But I think gangs are being formed even now. You don’t need a law for that. That happens outside the law,” Adeeb said.

Opposition leader and former President Mohamed Nasheed had dubbed the legislation the ‘Artur Brothers bill’, referring to the infamous Armenian brothers linked with money laundering and drug trafficking who made headlines last year after they were photographed with cabinet ministers.

Economic Minister Mohamed Saeed also defended provisions that allow 40 percent of investment in any special economic zone to be in tourism or tourism related industries.

Critics have said the excessive benefits and tax breaks to tourism related investments in SEZs would allows tourism owners to legally evade taxes.

But Saeed contended all SEZs, whether it is a free port or a financial center, require a tourism component, as “the Maldives’ unique selling point is sun, sand, and sea.”

With a US$1 billion investment, only US$400 million could be invested in tourism, just enough to build 250 rooms, Saeed said.

Dissolve councils

MP Ahmed Nihan warned the opposition dominated Malé City Council that the ruling party would not hesitate to dissolve councils that are “obstructing development.

“I am informing you tonight, as leader of the progressive party’s parliamentary group, I am closely observing Malé flooding and congestion in Malé,” he said.

“We will not hesitate to dissolve councils that obstruct the government in order to provide services. Our parliamentary group in general agrees to this. We know [councils] are obstructing development.”

The Maldives is a unitary state, he said and argued public land and assets do not belong to councils, but to the government and the president or a ministry designated by the president.

Meanwhile, MP Abdulla Rifau (Bochey) said the SEZs will create jobs for unemployed youth and Kudahuvahdoo MP Ahmed Amir pledged to stop any sort of corruption in SEZs.

Ratification

Speaking to the media on Thursday, Yameen said he would ratify the bill as soon as Attorney General Mohamed Anil reviews it, and start work on existing project proposals including the I-Haven project and SEZs in central Faafu and Dhaalu atolls.

“We will not wait until we get proposals. Our aim is to start work on evaluation of proposals we have already received. The government will compile the framework necessary for that under this bill. Then investors can come and start work. It will not be difficult for them to continue with their work with this bill,” he said.

President Yameen has said the SEZ law would “transform” the economy through diversification and mitigate the reliance on the tourism industry, while opposition leader Nasheed has dismissed SEZs and the touted mega projects as “castles in the air.”

Referring to the opposition to his administration’s public-private partnership projects on religious and nationalistic grounds – with opposition parties accusing the government of “selling off state assets” – Nasheed has previously argued that the current administration’s economic policies were far worse according to these standards.

Nasheed also contended that Maldivian law would not be enforced in the SEZs, claiming that gambling would be allowed in the zones.

Former coalition partner Jumhooree Party (JP) previously claimed the SEZ law would facilitate massive corruption and undermine independence, but on Wednesday announced a three-line whip in favor of the bill.

The change in the party’s stance closely follows the state’s cancellation of various business agreements made with the JP leader Gasim Ibrahim’s business Villa Enterprises.

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President Yameen hails passage of SEZ bill

President Abdulla Yameen has hailed People’s Majlis passage of flagship Special Economic Zone (SEZ) bill as an incentive for multi-million dollar investments in the Maldives.

The bill was passed with six minor amendments at an extended Majlis sitting at 10:54 pm on Wednesday night, with 60 MPs of the 85 member house voting in favor.

Opposition Maldivian Democratic Party (MDP) had proposed over 180 amendments, but all were rejected.

Speaking to the press today, Yameen said the SEZ bill dispels investor concern over short lease periods and legal protection.

“Investors willing to invest billions of dollars raise questions over land lease periods. If its 33 years, they are not interested in [investing]. This is why major investors lack interest in the Maldives. We cannot even hold discussions with such investors. We have now created the legal environment required to attract major investments. This creates such a framework,” he said.

People’s Majlis Speaker Abdulla Maseeh has also applauded the passage of the bill as an example of democracy, similar to that of American democracy.

The bill will be ratified after Attorney General Mohamed Anil reviews the bill, Yameen said.

Meanwhile, MDP MPs have contended the SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralization system, and authorize a board formed by the president to “openly sell off the country” without parliamentary oversight.

Speaking to the press after the Majlis session, MDP MP Rozaina Adam said the passage of the bill without any consideration to concerns raised by the opposition indicates the return to authoritarian rule.

“We now have a dictatorship here. The People’s Majlis, the presidency and the courts are all under one party,” she said.

Amendments

The MDP proposed a large majority of the 245 amendments to the SEZ bill. These include revising a provision that allows leasing of land to foreign companies for 99 years to reduce lease periods and adding provisions to require 75 percent of jobs in the SEZs to be reserved for Maldivians.

The MDP also proposed companies with a 49 percent foreign shareholder stake to lease land instead of purchasing land.

It also proposed scrapping Article 74, which allows up to 40 percent of any zone to be tourism-related development with tax and duty exemptions.

Amendments were also forwarded for mandatory consultation with local councils ahead of declaring any region under council jurisdiction as an SEZ.

None of the opposition amendments passed.

The MDP had also proposed to return the bill to a committee for further review, although this proposition failed with 57 of 73 parliamentarians present voting against it.

Former ruling coalition partner Jumhooree Party (JP) previously claimed the SEZ law would facilitate massive corruption and undermine independence, but on Wednesday announced a three-line whip in favor of the bill.

The change in the party’s stance closely follows the state’s cancellation of various business agreements made with the JP leader’s business Villa Enterprises.

On Monday (August 25), the Civil Aviation Authority downgraded Gasim’s Villa International Airport based on the MP’s constituency island of Maamigili to domestic status.

Similarly, on August 14 the government terminated an agreement with Villa Air to develop and manage the regional airport on Gaaf Dhaal Kaadehdhoo, while the fisheries ministry has also decided to reclaim Laamu Atoll Baresdhoo from Villa, stating that the company had not used it for the agreed purpose.

“Castles in the air”

Former President Mohamed Nasheed had dubbed the legislation the ‘Artur Brothers bill’, referring to an infamous pair of Armenians linked with money laundering and drug trafficking who made headlines last year after they were photographed with cabinet ministers.

Nasheed has also dismissed SEZs and the touted mega projects as “castles in the air.”

Referring to the opposition to his administration’s public-private partnership projects on religious and nationalistic grounds – with opposition parties accusing the government of “selling off state assets” – in a speech at an MDP event on August 12, Nasheed argued that the current administration’s economic policies were far worse judging by their terms.

“There could be no bigger deception of the Maldivian people,” he said.

Nasheed also contended that Maldivian law would not be enforced in the SEZs, claiming that gambling would be allowed in the zones.

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MDP submits over 300 amendments to SEZ bill

The opposition Maldivian Democratic Party (MDP) has submitted more than 300 amendments to the government’s flagship special economic zone (SEZ) legislation, currently in the final stage of the legislative process.

Briefing the press on the proposed revisions (Dhivehi) yesterday, MDP MP Rozaina Adam appealed for the public and local councils to urge pro-government MPs to vote for the amendments.

The ruling Progressive Party of Maldives (PPM) and coalition partner Maldives Development Alliance (MDA) have 48 seats in the 85-member People’s Majlis.

The MDP contends that an SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralisation system, and authorise a board formed by the president to “openly sell off the country” without parliamentary oversight.

The party also objects to exempting investors from paying import duties or taxes for 10 years as well as allowing companies with foreign shareholders to purchase land without paying sales tax.

The government, however, maintains that SEZs with relaxed regulations and tax incentives were necessary both for foreign investors to choose the Maldives over other developing nations and to launch ‘mega projects,’ which President Abdulla Yameen has said would “transform” the economy through diversification and mitigate the reliance on the tourism industry.

Following the submission of a report (Dhivehi) by the economic affairs committee after reviewing the legislation, the third and final reading of the bill began at today’s sitting of parliament.

MDP MPs proceeded to propose and second the amendments, which would be put to a vote individually ahead of a final vote on passing the bill.

Amendments

MDP MP Ibrahim Shareef explained yesterday that the main changes proposed to the bill include removing a provision to allow companies with a 49 percent stake held by foreign shareholders to purchase land.

The article would be changed to allow such companies to lease the land in lieu of ownership, he noted.

Moreover, a provision allowing leasing of land to foreign companies for 99 years would be revised to reduce the lease period.

The party further proposed adding a provision to require 75 percent of jobs in the SEZs to be reserved for Maldivians.

In line with Article 41 of the Constitution, Shareef said an amendment was proposed to require “fair and adequate compensation” to be paid for private property acquired by the state.

The MDP also proposed scrapping Article 74 of the draft legislation, which allows up to 40 percent of any zone to be tourist-related development with tax and duty exemptions.

Moreover, Shareef said an amendment was proposed to prevent resorts under development from being declared an SEZ.

Amendments were also forwarded for mandatory consultation with local councils ahead of declaring any region under council jurisdiction an SEZ.

On provisions for offshore banking, Shareef noted that an amendment was proposed for the Maldives Monetary Authority or central bank to exercise oversight over the financial services.

MDP MP Ibrahim Mohamed Didi – a retired brigadier general – meanwhile proposed an amendment banning any form of gambling or casinos in the SEZs.

He also proposed outlawing the construction of churches or temples for the worship of other religions as well as any such congregation in the SEZs.

Shareef contended that the party’s amendments would not obstruct the operation of the zones “fairly and without corruption in a way that would benefit the country”.

MP Rozaina explained that the other amendments were intended to hold the government accountable through parliamentary oversight.

An amendment was proposed requiring parliamentary approval for the president’s appointees to the investment board.

Moreover, amendments were proposed to include either an opposition MP or one member from each political party represented in parliament on the investment board.

Responding to opposition criticism of the SEZ bill last week upon returning from a visit to China, President Yameen noted that the constitution allows for “freeholds” and leasing of land for 99 years.

Article 251(b) of the Constitution states, “A foreign party shall not receive a lease of, or be given in any other way, any part of the territory of the Maldives for a period exceeding 99 years.”

Large foreign investments of US$300 to US$400 million would not be made if the lease period was any lower, Yameen argued, adding that “freehold rights” were offered for 99 years in developed nations.

Referring to the ‘iHavan’ transhipment port project  in Ihavandhippolhu, Yameen noted that the creation of SEZs would involve significant land reclamation while other areas that would be designated as SEZs were presently not utilised.

“So if it is MDP or anyone else talking about it, we are going to go forward with this work. God willing, it will go forward. And God willing, the special economic zone bill will be passed,” he said.

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