Category: Business & Tourism

Maldives business news

Tourist arrivals increase 16 percent in April

Tourist arrivals in April increased 16 percent in annual terms, reaching 105,309 guests during the month, but declined marginally compared to March, according to the Maldives Monetary Authority’s (MMA) latest monthly economic review.

A total of 105,560 tourist arrivals were recorded during the previous month.

“The annual increase in arrival was contributed by the increase in the number of arrivals from Asia and Europe,” the review stated.

“In April 2014, total bednights rose by nine percent in annual terms while the average duration of stay declined by six percent. As for the occupancy rate, it increased to 80 percent in April 2014 from 75 percent in April 2013, as the impact of the increase in bednights was greater than the increase in operational bed capacity of the industry during the review month.”

The central bank had explained in its monthly review for March that the annual increase in tourist arrivals was due to the rise in the number of Chinese tourists, “which offset the decline in arrivals from Europe.”

According to statistics from the Tourism Ministry for the first quarter of 2014, Europe retained the largest market share despite the continuing growth of the Chinese market, accounting for of 51.3 percent of all arrivals to the Maldives.

Asia and the Pacific recorded a growth rate of 24.4 percent at the end of first quarter, bringing in an additional 26,606 tourists to reach a total of 135,839.

The region accounted for 42.2 percent of arrivals to the Maldives at the end of first quarter of 2014.

The Chinese market also expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

A total of 331,719 Chinese tourists visited the Maldives last year, which was a 44.5 percent increase from the previous year.

Chinese tourists accounted for 29.5 percent of all tourist arrivals in 2013.

The Maldivian economy is largely dependent on tourism, which accounted for 28 percent of GDP on average in the past five years, and generated 38 percent of government revenue in 2012.

Real GDP growth is meanwhile expected to accelerate to 4.5 percent in 2014, “driven mainly by the tourism sector” while “economic activity is also expected to be spurred by the government budgeted expenditure of MVR16.4 billion.”

Inflation

The rate of inflation in the capital Malé – measured by the annual percentage change in the Consumer Price Index (CPI) – reached 2.6 percent in April, up from 2.3 percent the previous month.

The inflation rate in February 2014 was 3.4 percent.

“This was largely contributed by the pick up in the growth of food prices, especially fish, and also due to the moderate growth in rent prices and cost of health services,” the review explained.

“On monthly terms, the rate of inflation increased from -0.5 percent in March 2014 to 0.3 percent in April 2014, which was mainly due to the growth in fish prices.”

The International Monetary Fund (IMF) commodity price index meanwhile registered an increase of one percent in monthly terms and three percent in annual terms in April.

“The monthly increase was mainly due to the increase in prices of petroleum, food and metal prices. As for the annual increase, it was due to the increase in food and petroleum prices as metal prices fell during the review period.”

“The price of crude oil increased by one percent in monthly terms and by six percent in annual terms to US$104.9 per barrel at the end of April 2014,” the review stated.

Gross international reserves meanwhile grew by 24 percent in April compared to the same period last year, reaching US$434.8 million by the end of the month. The gross reserves however declined by 13 percent in April in monthly terms.

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MMA seeks feedback on draft consumer finance law

The Maldives Monetary Authority (MMA) has invited interested parties to submit comments, views and suggestions on a consumer finance bill drafted by the central bank.

The bill is intended for “the purposes of providing for licensing of financial institutions to conduct consumer finance business in Maldives, policies for the operations of such institutions in a safe and prudent manner, supervision of such institutions and provision for other related purposes.”

Interested parties were asked to submit feedback on the draft legislation through email before June 15.

Consumer finance involves a variety of loans to individual consumers, including credit cards and mortgage loans from banks and credit unions as well as alternative lenders such as finance companies.

Earlier this month, CEO of the Capital Market Development Authority (CMDA) Fathimath Shafeega told Minivan News that the Maldives was  “ideally placed” to become an international financial centre.

The country’s fledgling legal framework for the finance sector was both a strength and a weakness, she explained: “We don’t have regulations hindering a lot of things. We can start from a clean slate. But parliament needs to be very much involved in it. We might need to provide the software – laws and regulations and other policy frameworks – while investors can bring the hardware.”

Shafeega also argued that the successful establishment of an Islamic Capital Market – featuring Shariah-compliant financial products – would also add to the Maldives’ appeal as a future financial hub.

Strengthening the finance sector

Meanwhile, in a keynote address delivered at a finance forum held earlier this month, MMA Governor Dr Azeema Adam stressed the importance of an “efficient and modern financial sector” as well as access to finance for creating “a society of entrepreneurs.”

“To allow the financial sector to thrive, it is imperative that we have a well-developed legal framework,” she said.

“When the legal framework is fully developed, there would be timely enforcement of contracts, and the protection of investors’ rights. There would be legal instruments for recovering debt. There would be speedy settlement of commercial cases in the courts.”

She noted that the central bank was working with the government to introduce new legal instruments and to strengthen institutions, referring to the recently passed Anti-Money Laundering Act as “one such legislation that would safeguard the financial sector from criminal activities and enhance investor confidence.”

While the central bank has a “fairly robust financial sector regulatory framework,” Dr Azeema said the MMA was in the process of reviewing existing regulations to identify constraints to the development of the finance sector.

“This will minimise the chances for the financial system to be burdened by unnecessary rules and unintended consequences,” she explained.

“International experience suggests that even a slight improvement in the legal and financial regulatory frameworks brings significant changes to the financial sector, enabling new financial products to emerge.”

She added that the financial services currently provided in the country should be expanded and modernised in order to attract investment.

“There is scope and indeed the need for increased competition in the financial sector,” she continued.

“The banking sector needs to be modernised. It is time that banks adopt 21st century tool kits in providing services to their customers. The banking sector has to become more competitive, and banking services need to be expanded. Non-bank financial services and capital market activities also need to be further developed in the country.”

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Legal restrictions a challenge to investment expansion: Pension Office

The Maldives Pension Administration Office (MPAO) has said legal restrictions are preventing the expansion of investments into profitable industries such as real estate.

The MPAO cannot invest in real estate as none are currently listed securities at the Maldives Stock Exchange, the only registered stock exchange in the country, said CEO Mohamed Hussain Manik.

The Maldives Pension Act states that pension assets can only be invested in securities listed at a licensed stock exchange in the Maldives.

Manik said the office was currently in the process of identifying reliable and secure investments at technical level. Based on the findings of this work, the MPAO will consider expansion, but it may require amendments to the law, he added.

In order to prepare for the future plans for expansion, the MPAO recently held an investment seminar targeting the finance sector as well as a finance forum to discuss international finance and capital markets.

While the Pension Act details many conditions which should be considered when investing from the fund – such as minimum risk and maximum returns for the beneficiaries of the scheme – it also stresses diversification of investments.

According to the office, the annual return from current investments are on average at 7 – 8 percent with the fund expected to reach an estimated MVR3 billion by September or October this year.

In a press statement, the office has said that, considering the current inflation rates, this return is profitable for the beneficiaries for the scheme.

It was highlighted, however, that in order to sustain the increasing returns as the fund grows in size, they may have to take advantage of more investment opportunities both in the Maldives and abroad.

Statistics from April 2014 indicate that nearly 83 percent of the fund’s investment portfolio goes into government treasury bills which, according to the office, is also the most profitable due to high interest rates caused by increasing government debt.

Only 7 percent of it is invested in domestic equity and less than seven percent in fixed deposits.

Earlier this month the Capital Market Development Authority (CMDA) – an independent institution set up to develop and regulate the capital market and pension industry – said market development had not kept pace with pension development.

Speaking to Minivan News, CEO of the authority Fathimath Shafeega highlighted the importance of diversification and seeking profitable alternative investments for the pension fund, beyond the limitations of the Pension Act.

She also said that, following CMDA recommendations, the government – which holds a majority in the newly inaugurated parliament – is planning to introduce amendments to the Pension Act.

Beginning in March this year, the government more than doubled the monthly basic pension – with all citizens aged over 65 now receiving MVR5,000.

The basic pension, to which all retirement-age citizens are entitled, is still MVR 2,300 per month while the additional MVR2,700 is provided from the state budget by the Ministry of Finance and Treasury.

With an estimated 17,000 pensioners, the government had allocated MVR470 million (US$30.5 million) in the state budget to give out an MVR2,300 (US$149) in cash handouts.

At the time, the head of the cabinet’s economic council Ahmed Adeeb said that “innovative” methods, such as investing in the pension fund or government T-bills would prevent the need to divert funds from within the state budget. The MPAO has, however, said that no such arrangements have yet been made with regard to the basic pension.

The MPAO investments are currently made only for the Maldives Retirement Pension Scheme (MRPS) beneficiaries, a defined contribution scheme which requires both employer and employees to contribute seven percent (total fourteen percent) of the pensionable wage.

Under the plan, pension benefit payout at retirement will depend on the amount contributed and investment returns. It is mandatory for all Maldivian contract employees but voluntary for foreign employees.

Currently, MRPS beneficiaries will also receive a minimum of MVR5,000 if their payout is smaller than this amount.

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MMA governor calls for courageous cuts at third Maldives Finance Forum

The third Maldives Finance Forum was opened with the Governor of the Maldives Monetary Authority (MMA) Dr Azeema Adam calling upon stakeholders to take more courage in reducing government expenditure.

“There needs to be a change particularly with regards to disorganised subsidies, and revenue needs to be increased,” Dr Azeema was reported to have told attendees.

“But that is not something the government alone could do. It should be done together by many.”

Azeema’s comments echoed the findings of the MMA’s 2013 macroeconomic report, which warned that further “slippages” in revenue or spending would undermine medium-term debt sustainability,with adverse effects on exchange rate and prices.

The third Maldives Finance Forum took place today at Bandos Island Resort, focusing on the issue of international financial and capital markets, and financial literacy.

Organised by the Maldives Pensions Administration Office (MPAO), the event sought to bring together leaders from the political, academic, financial, and social sectors to share ideas for the further development of the Maldivian financial sector.

Also speaking at today’s forum were Head of Official Institutions at Schroders Gavin Ralston, Global head of the JP Morgan’s Islamic Finance practice Dr Hussain Hassan, Minister of Economic Development Mohamed Saeed, and leading figures from the Maldivian business community.

Among the forum’s stated objectives the identification of legal and regulatory impediments to development, the promotion of financial literacy among the public, and awareness raising of the potential of the country’s pension fund.

The pension fund – overseen by the Capital Market Development Authority (CMDA) – is currently in need of diversification, CMDA CEO Fathimath Shafeega recently told Minivan News

“As you know the pension system in Maldives has assumed that there will be a developed capital market. The development of the capital market has not kept pace with the pension development,” she explained .

Beginning in March this year, the government more than doubled the monthly pension – with head of the Cabinet’s Economic Council Ahmed Adeeb stating that “innovative” investment would prevent the need to divert funds from within the current budget.

The CMDA’s quarterly report last week for the first time featured details of the country’s nascent Islamic Capital Markets, indicating the rapid growth of Shariah-based financial products in the country in recent years.

Shafeega expressed confidence that the Maldives was well positioned to become an international centre of both Islamic and non-Islamic finance in future years – the evolution of both these areas was discussed by touched Mr Ralston and Dr Hassan, respectively, at Bandos today.

Today’s speech from the economic development minister discussed issues faced in attracting foreign investment and finance – something the current government has made a priority, organising a landmark foreign investment forum in Singapore last month.

The ensuing panel discussion at today’s forum concerned accessing global financial markets and securing foreign investments.

During the recent investment forum in Singapore, President Abdulla Yameen announced his intention to create “a resilient, diversified high income economy in the next decade.”

The government was committed to exploring “openings for increasing foreign investment flows to non-traditional sectors to lift Maldives beyond the image of a picturesque postcard,” said Yameen.

The current economy relies on the tourism industry for an estimated 80 percent of GDP.

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Addu City Council reveals plans to develop 2000 guesthouse beds

Addu City Council aims to assist in the development of 2000 guest house beds in six areas across the country’s southernmost atoll.

The council’s Guesthouse Tourism Promotion Board – to be established this week – will also oversee five diving centers, six watersports centres, six restaurants, and a sailing club.

“The biggest problem we have in Addu right now is lack of job opportunities. Adduans work in tourism all over the Maldives,” explained Mayor Abdulla ‘Soabe’ Sodiq.

“This venture will allow them to work in their home islands and also open up opportunities to start their own businesses.”

Guest house development on inhabited islands was a key election pledge of the opposition Maldivian Democratic Party, to which all members of the Addu City Council belong.

The party also campaigned in all recent elections with the pledge to strengthen decentralisation, pushing to increase the role of councils in development.

The US$20million venture is seen by the council as the best way to bring tourism development to the atoll which, despite being the country’s second largest urban area, is home to just 3.6 percent of the industry’s registered bed capacity.

With a recent tourist survey showing that 80 percent of tourists – who numbered over 1 million in 2013 – travel under an hour from Malé’s Ibrahim Nasir International Airport to reach their destination, Addu’s council has also recognised Gan International Airport to be vital to the scheme.

Ahmed Hamed, owner of the atolls only registered guest house – the Charming Holiday Lodge in Meedhoo Island – also feels transport to be the key issue Addu’s full participation in the mid-market sector which has grown from just 22 to 171 registered businesses in five year.

Hamed suggested that the potential for expansion in the atoll is great, but will have to take place in tandem with airlines providing more, and cheaper flights to the atoll.

Less than an hour from the capital Malé, the average price of a domestic flight to Addu is currently similar in price to longer haul tickets to India or Sri Lanka, with Hamed noting that much of his time as a guest house owner has been spent campaigning to get cheaper deals from local carriers.

Having opened his business last year, Hamed already plans to triple his guesthouse’s bed capacity in the coming months.

“People will come to Addu – I have many friends who want to come,” said Ahmed. “If there are more guesthouses I’m sure this will be okay for the airlines.”

Echoing a figure given by the council, Hamed suggested 3000 beds to be the necessary size for a successful guest house industry in the atoll.

During today’s press conference, the council revealed that work to develop Gan Airport – formerly a British RAF base – was ongoing.

The council’s guesthouse promotion board will also assist prospective guest house owners in finding land for 25-year lease periods, in obtaining 70 percent of construction expense, in making connections with tour operators and management companies, as well as staff training

In a document detailing the venture, two sites in Hithadoo – the second largest populated island in the country – have been identified for new developments, as well as single sites in the neighbouring Maradhoo, Maradhoo-Feydhoo, Feydhoo, and across the lagoon in Hulhumeedhoo.

Those who are interested are requested to send a letter or an email to Addu City Council secretariat before 3:00pm on June 30.

Photo by: Naj

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Slippages in revenue or expenditure will undermine debt sustainability: MMA macroeconomic report

Shortfalls in revenue or overruns in expenditure in 2014 “will undermine medium-term debt sustainability” and adversely affect the exchange rate and prices, the Maldives Monetary Authority (MMA) has cautioned in a report on macroeconomic developments in 2013.

On the outlook for the economy in 2014, the report released this week noted that the fiscal deficit was projected to decline to 3.2 percent this year from 4.7 percent in 2013 on the back of higher revenue from tourism-related taxes and payments for resort lease extensions as well as rationalisation of subsidies.

“Despite this positive outlook, there is a considerable amount of uncertainty surrounding the 2014 budget. Overruns in current expenditure will most likely lead to financing difficulties for the government or further crowding out of the private sector,” the central bank warned.

“Any setback to fiscal consolidation either due to slippages in revenue or current expenditure will undermine medium-term debt sustainability and will have adverse implications for exchange rate and prices.”

Outlook for 2014

Economic growth in 2014 is projected at 4.5 percent, an increase of 0.8 percent from the previous year.

“Growth will be driven by the continued expansion of tourism activity which is to be mainly supported by the robust growth of Chinese tourists,” the report explained.

“In 2014, growth is also expected to benefit from the recovery of construction sector which registered declines in the past two years. Activity in the construction sector is expected to recover due to the easing of material shortages and the continued expansion of residential construction projects amid improved bank credit to the sector.”

While the transport and communication sectors are expected to grow “in tandem with better prospects for the tourism industry,” the report noted that primary fishing activity is projected to decline slightly.

Inflation is expected to “remain moderate” in 2014, which “largely reflects the weaker outlook for global commodity prices”.

However, lower commodity prices were expected to “offset the upward impact of one-off factors such as the introduction of GST on communication services and reversal of import duty for certain goods during the year.”

The current account deficit is expected to widen by 16 percent to US$269.9 million this year as “improved receipts from tourism is insufficient to off set the increase in imports, interest payments and remittance outflows.”

While imports are expected to grow “in line with the projected increase in economic activity from tourism, construction and government sectors,” exports are expected to decline on account of a projected decrease in fish catch and global tuna prices.

“Meanwhile, gross international reserves are projected to improve in 2014 mainly due to inflows from the planned new revenue measures stemming from the tourism sector. In line with this improvement, reserves in terms of months of imports, are also projected to increase slightly,” the report stated.

Revenue and expenditure

While total revenue excluding grants reached MVR11.5 billion (US$745 million) last year – an increase of 18 percent from the previous year – revenue collection was lower than anticipated “owing to delays in the implementation of the planned new revenue raising measures as envisaged under the budget.”

Tax revenue accounted for 75 percent of total revenue in 2013 while non-tax revenue “declined marginally” to MVR2.8 billion (US$181 million).

Total government expenditure in 2013 was MVR13.5 billion (US$875 million), which was four percent below the target.

The report explained that capital expenditure was significantly lower than expect, “which offset sizeable overruns in current expenditure.”

“Meanwhile, although the government repaid some of the unpaid bills from previous years, a further build-up of arrears took place in 2013 as well and if these are considered total expenditure for 2013 will be much higher than estimated,” the report stated.

Current expenditure accounted for 84 percent of total government spending in 2013, reaching MVR11.4 billion (US$739 million), which was 11 percent in excess of the budgeted amount.

Salaries and allowances contributed the largest share at 48 percent of current expenditure, “reflecting the bulky public sector,” followed by subsidies and social welfare contributions at 18 percent, administrative costs at 13 percent, and interest payments at eight percent.

As large debt repayments were made between December 2012 and February 2013, interest payments in 2013 declined by 19 percent compared to the previous year and stood at MVR893.6 million (US$57.9 million).

Debt and deficit

As a result of “slippages in both revenue and expenditure” in 2013, the fiscal deficit is currently estimated at 4.7 percent of GDP, down from 9.2 percent in 2012.

The budgeted target for 2013 was however 3.6 percent.

The report noted that total debt of the government reached 78 percent of GDP at the end of 2013 as a consequence of “the sustained high budget deficit” over the past years.

Domestic debt accounted for 58 percent of total public and publicly-guaranteed debt.

“In 2013, the financing requirement of the government was met almost entirely through domestic sources: mainly through the issuance of Treasury bills (T-bills) to the domestic market and monetisation,” the report explained.

Net credit to the government by the MMA “increased from MVR4.7 billion at the end of 2012 to MVR6.0 billion at the end of 2013,” the report revealed.

The total outstanding stock of T-bills meanwhile reached MVR8.2 billion by the end of 2013.

“A large part of this increase was attributable to the increase in investments by other financial corporations and public non-financial corporations, which can be seen from the increase in their share of holdings (as a percent of total outstanding T-bills) from 28% at the end of 2012 to 44% at the end of 2013,” the report stated.

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MACL can sue former chairman over GMR airport charge decision, says Civil Court

The Civil Court has ruled the Maldives Airports Company (MACL) can sue its former chairman for allowing the disputed Airport Development Charge (ADC) to be deducted from Indian infrastructure giant GMR’s concession payments during it’s ill-fated agreement.

MACL alleges ‘Kuda Bandhey’ Ibrahim Saleem’s decision to be an act of ‘Ultra Vires’ – meaning that Saleem had acted beyond his permitted authority.

The ruling came following a procedural issue taken by Saleem said he was being wrongfully charged claiming the lawsuit was filed in violation to Article 18 (c) of the Contract Act and Article 74 Company Act.

The Contract Act states a clause requiring a party to refer to arbitration any dispute arising from the contract shall be valid, while the Company Act says the court has a right to issue orders holding personally liable the directors of the company to commit an offense in the name of the company.

But the Civil Court ruling stated that the Company Act does not prohibit the company chairman from being sued personally.

The airports company sued Saleem after he signed a letter sent to GMR on January 5 2012 stating that the ADC and the insurance surcharge fee had been deducted from GMR’s concession payments.

In late 2011, the then-opposition Dhivehi Qaumee Party (DQP) had filed a successful Civil Court case blocking GMR from charging US$25 charge for outgoing passengers – stipulated in its agreement with the government – on the grounds that it was a tax not authorised by parliament.

Former President Mohamed Nasheed’s administration subsequently chose to honour the original contract, instructing GMR to deduct the ADC revenues from the concession fees due to the state-owned MACL while it sought to appeal the Civil Court ruling.

However, with the Nasheed’s controversial resignation coming just one month later, the opposition soon inherited the contractual problem.

Dr Mohamed Waheed’s government then received a succession of bills from the airport developer throughout 2012, despite its insistence that the January 5 letter from MACL outlining the new arrangement was no longer valid.

In December 2012, the Anti-Corruption Commission (ACC) filed a case with the Prosecutor General’s Office over Saleem’s decision to allow GMR to deduct the ADC from concession fees owed to the state.

As part of the filed case (Dhivehi), the ACC was seeking reimbursement of MVR 353.8 million (US$22.9 million) from Saleem and former Finance Minister Mohamed Shihab over the alleged misuse of authority it claimed had led to significant financial loses for the state.

These losses were used as justification for the contract’s eventual termination in December 2012, for which GMR is currently seeking compensation via a Singapore court of arbitration.

According to the case filed by the ACC, former Finance Minister Shihab stands accused of misusing his ministerial authority to benefit a third party by allowing GMR to deduct the charges between October 2011 and September 2012.

The ACC has also accused Saleem violating the company’s rules. According to the ACC’s case, normal procedure for MACL would be to have the company’s board of directors pass a resolution allowing for consent to be given to deduct the ADC.

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Maldives “ideally placed” to be international financial centre, says CMDA chief

CEO of the Capital Market Development Authority (CMDA) Fathimath Shafeega believes the Maldives to be “ideally placed” to play the role of an international financial centre.

Describing the country as strategically well-placed, the head of the independent regulatory authority noted that the country’s nascent financial framework was both a weakness and a strength.

“We don’t have regulations hindering a lot of things,” noted Shafeega. “We can start from a clean slate.”

“But parliament needs to be very much involved in it. We might need to provide the software – laws and regulations and other policy frameworks – while investors can bring the hardware.”

Senior members of both the previous and the current administration have considered the development of offshore banking services as a way to diversify an economy heavily reliant on tourism.

“It’s very much still on the agenda,” said Shafeega.

Shafeega spoke with Minivan News following the release of the CMDA’s first quarterly report in 2014, which revealed the authority’s work this year had focused on drafting legislation to further modernise the market, as well as amending the Corporate Governance Code in order to increase gender diversity on the boards of publicly listed companies.

Islamic Finance

Established by the Maldives Securites Act in 2006, the CMDA’s quarterly report for the first time included details of the Islamic Capital Market – an area the report describes as having an “ever-green future in the Maldives”.

Indeed, Shafeega argued that the successful establishment of an Islamic Capital Market – featuring Shariah compliant financial products – would also add to the Maldives appeal as a future financial hub.

Introducing the quarterly update on the Islamic Capital Market development, Deputy Islamic Minister Dr Aishath Muneeza, argued that there was now a “global movement towards the creation of financial transactions based on underlying activities or underlying assets.”

“Relying on real economic activities has been the success secret of Islamic finance and now we are being forced to find innovative ways to adopt this method,” said Dr Muneeza.

Under Islamic Shariah, any risk-free or guaranteed rate of return on a loan or investment is considered riba, which is prohibited in Islam.

Also chair of the Capital Market Shariáh Advisory Council (CMSAC), Dr Muneeza this quarter became the first person granted Shariah advisor registration status in the Maldives.

CMSAC was created in December 2013 in order to advise the CMDA on the development of an independent Islamic Capital Market.

The council’s activities this quarter included the formulation of a five year plan to increase the availability of Shariah compliant services, raise awareness of Islamic finance, and establish an Islamic Finance Centre in the Maldives.

Writing for the Islamic Finance News website in March, Dr Muneeza  described Islamic Finance as “spreading like wildfire” since the introduction of Islamic banking and capital market services in 2011.

“It is hoped that in the upcoming years the Maldives can be used as a global case study to prove the success of Islamic finance,” she wrote.

Pensions

Shafeega also expressed confidence that the state pension fund – for which the CMDA plays a supervisory role – can soon successfully diversify its investment portfolio.

“As you know the pension system in Maldives has assumed that there will be a developed capital market. The development of the capital market has not kept pace with the pension development.”

Beginning in March this year, the government more than doubled the monthly pension – with individuals aged over 65 now receiving MVR5000.

The government had allocated MVR470 million (US$30.5 million) in the state budget to give out an MVR2,300 (US$149) in cash handouts, with head of the Cabinet’s Economic Council Ahmed Adeeb stating that “innovative” investment would prevent the need to divert funds from within the current budget.

The CMDA quarterly report noted that research had been carried out in order to ascertain potential avenues for investment beyond government or listed securities – the only options currently utilised.

“For the pension fund to be able to generate a good return for the members, we need to diversify the pension investment,” Shafeega told Minivan News.

“We need to find alternative investment that can generate a good return”

Shafeega also expressed confidence that the additional revenue could be realised, revealing that – following the authority’s recommendations – the government was planning to introduce changes to the Pensions Act during the 18th Majlis.

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India offered to build naval dockyard in Maldives, says Indian media

India’s Army Chief General Bikram Singh has offered to build a dockyard worth MVR 7.7 billion (US$ 500 million) in the Maldives in his ongoing visit, Indian media has reported.

According to the Deccan Herald, China had already offered to develop the Uthuru Thilafalhu lagoon in the archipelago’s north.

Reclamation work is already underway in the area. Once completed, it will serve as the Maldivian Coastguard’s primary operations base and will provide a much-needed berthing space to naval ships and ocean liners.

India’s Foreign Secretary Sujatha Singh, during a visit to the Maldives in February, visited the Uthuru Thilafalhu project site. Minivan News understands discussions are underway on Indian investment in the project, but it is not clear if a decision has yet been made.

In recent months, India has been steadily increasing defense cooperation with the Maldives including the gifting of two ‘Dhruv’ Advanced Lightweight Helicopters (ALH) and development of the military hospital Senahiya.

Ties with India came under strain during President Dr Mohamed Waheed’s administration in the aftermath of Indian infrastructure giant GMR’s abrupt eviction. The company had won a concession agreement to develop the main airport.

Waheed went on to strengthen military ties with China, sparking Indian concern over “a Chinese policy to throw a ‘string of pearls’ – or a circle of influence – around India.”

Speaking during an official trip to India earlier this year, new President Abdulla Yameen stated that while the Maldives has “close ties” with China, “nothing will precede ties with India, which are far more precious”.

“While we have had a slight rough patch with India, the time of good relations far outweigh the rough patches we had. I suppose it is easy for us to be on the right track again,” Yameen said, referring to the airport dispute.

Singh’s visit is the first by a serving Indian Defense Chief since General Deepak Kapoor’s visit in February 2010.

An Indian High Commission press release on Tuesday said Singh’s three day visit – set to conclude today – will “further enhance bilateral defense cooperation.”

“India’s commitment to Maldives defense has been growing with each passing year. Both countries have inter-linked mutual security interests which need to be protected for the safety and security of the South Asian region and the Indian Ocean,” the statement said.

During his visit, Singh met with President Yameen, Defense Minister Mohamed Nazim and the Maldivian Chief of Defense Forces Ahmed Shiyam.

Singh also discussed the possibility of supplying fast-attack craft, amphibious landing craft and small arms from New Delhi, reported the Deccan Herald.

Another potential project is to train 40-60 officers of the Maldivian National Defence Force (MNDF) in Indian training establishments, the article continued.

“All such topics were discussed. But we will reveal details at a later time,” said MNDF Deputy Spokesperson Captain Ali Ihusaan, when asked for a comment on reports by Indian news sources.

Chinese investments including a US$54 million for an IT infrastructure project sparked Indian concern in 2013, with Indian Ministry of Communications and IT saying Beijing’s state owned companies must be “kept at bay.”

According to Indian media, the ministry – in an internal government note – suggested “substantial investment in the Maldives on similar projects [as being planned by China] ensuring that the traffic between India and the Maldives is handled through the equipment installed and commissioned in the Maldives by India.”

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