Category: Business & Tourism

Maldives business news

Maldives tuna source UK’s first certified sustainable tuna sandwich

Tuna caught in the Maldives is the source of the UK’s first certified sustainable tuna sandwich, UK media have reported.

The Supermarket chain Sainsbury’s uses the Marine Stewardship Council (MSC) certified pole and line caught tuna from the Maldives in its new range of sandwiches.

The MSC ‘eco-label’ is said to provide consumers with the assurance that a product is traceable back to a certified and sustainable source. In November 2012, the Maldivian pole and line skipjack fishery received the certification for its low-impact technique where each wild fish is caught individually to reduce by catch.

“By choosing tuna from the Maldives tuna fishery, Sainsbury’s is supporting artisanal fishermen who have made an international difference to the way the Indian Ocean fishery is managed,” the Marine Steward Council’s Senior Country Manager Toby Middleton said.

He went on to describe the move by Sainsbury’s as a milestone for sustainable seafood.

The Maldives’ skipjack tuna fishery is the first Indian Ocean tuna fishery to receive the MSC certification. At the time, Minister of State for Fisheries and Agriculture Hussain Rasheed Hassan said export prices for Maldivian tuna would increase with the certification.

“There is a much better opportunity to sell abroad now, and despite our tuna already selling at a premium rate, I believe this certification will mean it is very likely that the prices will increase further,” he said.

In November 2013, the European Union declined to extend the duty-free status of imported fish from the Maldives following the country’s failure to comply with international conventions concerning freedom of religion.

The Maldives exports 40 percent of its US$100 million fishing industry to the EU, its single largest export partner by value.

Until January 2014 those exports were duty-free under the Generalised System of Preferences (GSP) program, a non-reciprocal trade agreement extended to developing countries.

Maldives’ Fisheries Minister Ahmed Shafeeu said the government’s application for a year’s extension under the ‘GSP Plus’ program was declined as it had not ratified all 27 required international conventions.

He warned that the sudden imposing of a 14- 20 percent duty on fish imports would lose the Maldives its competitive advantage over the larger fishing fleets of nearby Sri Lanka and Thailand, and reduce profits to “a marginal value.”

The Maldives National Chamber of Commerce and Industry (MNCCI) slammed the EU in March, claiming the organization was attempting to spread values that Maldivians do not accept.

“When they took this action against us, they did not consider that the Maldives is the country that does fishing the most environmentally friendly way,” MNCCI Vice President Ismail Asif said.

Fisheries is the country’s largest employer at 40 percent and second largest industry.

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GMR is only owed reimbursement, not compensation, says AG

Indian infrastructure giant GMR is only owed reimbursement for expenses, not compensation for the abrupt termination of the concession agreement to develop Malé International Airport (INIA), Attorney General Mohamed Anil has said.

Clarifying President Abdulla Yameen’s previous statement that GMR is owed a payment, Anil said the government believes the company is only owed reimbursement for a US$ 78 million upfront concession fee and any other expenses.

“When the agreement was first signed, US$78 million was given to the Maldivian government. In addition to that, we can see that they have spent some amount. So in the worst case scenario, if we are to revert to the state before the agreement was signed, everyone believes that they are owed [what they spent]. That is not as compensation for losses caused by the cancellation of the agreement,” he said.

GMR has said it will stick to a US$ 1.4 billion compensation claim – an amount that exceeds the annual state budget.

“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid,” the company said in a statement on April 26.

Anil said GMR’s claim is unclear, as the company had not submitted documents detailing the assertion.

In response, GMR’s legal team member Uz. Fayyaz Ismail told Minivan News details of how GMR arrived at the figure will only be revealed in the second part of the arbitration process.

The arbitration tribunal in August 2013 had acceded to GMR’s request to split the proceedings in two – firstly determining liability, before quantifying the amount of compensation to be paid separately.

“GMR is claiming it to be a wrongful termination, and if the tribunal awards a verdict for that during the first part of this bifurcation arbitration [two part arbitration process] only then would the [compensation] amount be decided through second part of the arbitration. We are very confident the rightful compensation would be received,” Ismail said, adding that the figure may be subject to minor variations.

Yameen in early April said the Maldives government will not be able to pay GMR’s claim, but conceded “some sort of financial compensation must be paid.” He estimates the figure to be a “manageable” US$ 300 million.

The GMR in consortium with Malaysia Airports (MAHB) narrowly won the International Finance Corporation (IFC)-managed bid for the airport in 2010, and signed the agreement with MACL under the former government of Mohamed Nasheed. The opposition at the time, including Yameen’s Progressive Party of the Maldives (PPM), then began a vitriolic nationalist campaign to evict GMR.

Following Nasheed’s ouster in 2012, President Mohamed Waheed’s administration terminated the agreement claiming it was ‘void ab initio’- invalid from the outset.

When the Singaporean High Court’s injunction blocking the Maldivian government from voiding the agreement was overturned by the Supreme Court in Singapore in June 2013, GMR initiated an arbitration process.

The first part of the arbitration took place in Singapore from April 10 – 16. Minivan News understands the arbitration tribunal considered GMR’s claim of wrongful termination, parallel claim for loss of profits over the lifespan of the agreement, and the Maldive’s counter-claim for restitution.

A verdict is expected soon, at the latest by mid- June. Depending on the verdict, the second process of arbitration will begin on a mutually agreed upon date.

Although Anil said the second half could take months to begin or even year for a ruling, Ismail has refuted the claim.

Despite the pending arbitration decision, expansion and development of INIA was among the five mega-projects for which the government was seeking investors at the Maldives Investment Forum held in Singapore’s Marina Bay Sands in late April.

Meanwhile, Nasheed has warned of a sovereign debt crisis if the Maldives is forced to pay the full US$ 1.4 billion and reiterated his Maldivian Democratic Party’s (MDP) call to reverse the decision to cancel the contract.

In a press release last week, Nasheed insisted that international best practices were followed in the bidding process – which was overseen by the World Bank’s International Finance Corporation (IFC) – while the Anti-Corruption Commission (ACC) has since ruled out corruption in the airport deal.

“The Maldives is now known around the world as a country that doesn’t keep its promises or honour the contracts. The airport fiasco will hit each and every Maldivian because banks won’t lend money and companies won’t invest in our country without demanding much higher rates of interest,” Nasheed said.

“By now, Maldivians should have been looking forward to a world-class, new airport, to rival Kuala Lumpur, Singapore, and Hong Kong. Instead we have nothing but an abandoned building site. The actions of President [Abdulla] Yameen and [Dr Mohamed] Waheed have caused this crisis and Maldivians will be paying for their recklessness for decades to come” he added.

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Tourist arrivals increase six percent in March

Tourist arrivals in March increased six percent in annual terms but declined five percent in monthly terms, reaching 105,560 guests during the month, according to the Maldives Monetary Authority’s (MMA) monthly economic review released yesterday (April 30).

“The annual increase was due to the rise in the number of arrivals from China which oïŹ€set the decline in arrivals from Europe,” explained the central bank’s monthly update of “developments in key economic sectors”.

Total bednights meanwhile rose two percent in annual terms, “while the average duration of stay declined marginally.”

The occupancy rate also decreased slightly compared to March 2013, falling to 82 percent. The report noted that the operational capacity of the tourism industry rose during the review month.

The Tourism Ministry meanwhile revealed yesterday that tourist arrivals in the first quarter of 2014 increased 9.7 percent compared to the same period of 2013, reaching a total of 321,561.

Europe retained the largest market share, accounting for of 51.3 percent of all arrivals to the Maldives with a total of 321,561 tourists during the first quarter of the 2014, the Tourism Ministry stated.

Asia and the Pacific recorded a growth rate of 24.4 percent at the end of first quarter of 2014, 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.

According to the Tourism Ministry, the Chinese market expanded by 24 percent with an additional 16,960 tourists compared with the same period of 2013.

Statistics from the Tourism Ministry show that 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.

Inflation

Meanwhile, in the second largest industry, the volume of fish exports as well as earnings “fell signiïŹcantly by 80 percent and 66 percent respectively” compared to March 2013.

The decline was accounted for by the fall in the volume of and earnings from “fresh, chilled or frozen tuna exports.”

“The International Monetary Fund (IMF) commodity price index fell marginally in monthly and annual terms during March 2014,” the central bank noted.

“The monthly decline was mainly due to the fall in both petroleum and metal prices which oïŹ€ set the increase in food prices during the review month.”

The price of crude oil in March 2014 was US$104 per barrel.

The inflation rate in the Maldives meanwhile decelerated to 2.3 percent in March from 3.4 percent the previous month.

“This was largely contributed by the slower growth in food prices, especially fish, and also due to the moderate growth in the prices charged for housing and utilities,” the report explained.

“Similarly, the rate of inflation declined marginally in monthly terms during March 2014, which was also due to the slower growth in fish prices.”

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MDP calls for GMR reinstatement

Opposition Maldivian Democratic Party (MDP) has called for the reinstatement of the airport development contract with Indian GMR Infrastructure and warned the party will terminate any new agreements if it comes to power.

“The MDP immediately calls on the Government of Maldives that instead of repealing the annulled agreement in order to award it to another party, to render it to its original benefactor. The failure to conduct this repeal would allow Maldives to suffer unforeseeable risk and irrevocable harm,” the party said in a statement today.

“[T]his party on this day hereby resolves that any government formed by this party shall annul all corrupt agreements made by this government regarding the airport and render it back to whom it is rightfully due.”

The warning comes following President Abdulla Yameen Abdul Gayoom’s call for new airport developers at an investment forum in Singapore.

The GMR, in consortium with Malaysia Aiports, narrowly won the International Finance Corporation (IFC) managed bid for the airport in 2010, and signed the agreement with Maldives Airport Company Ltd (MACL) under the former government of Mohamed Nasheed.

However, following a nationalist campaign to evict GMR and Nasheed’s ouster in February 2012, new President Dr Mohamed Waheed Hassan declared GMR’s concession agreement ‘void ab intio’ (invalid from the outset) in December 2012, and gave GMR seven days to leave the country.

After Singaporean court upheld the government’s decision, the GMR filed a claim for US$ 1.4 billion in compensation from the Maldives – a figure that eclipses the annual state budget. Arbitration proceedings are now underway in Singapore.

Yameen has conceded the government must compensate GMR, but said the company is only owed US$ 300 million.

The MDP noted an Anti Corruption Commission (ACC) investigation had confirmed the GMR agreement to be corruption free and said the agreement had been made according to legal and international best practices.

The ACC noted an MACL managed airport would raise US$ 254 million in 25 years while the GMR consortium would bring in US$ 534 million.

“For these reasons the MDP Government, having found that the best advantage for the Government of Maldives would be to privatise the airport, it was assigned to GMR with the benefit and wellbeing of Maldivian people in mind; where it was impliedly and manifestly known that the matter was undertaken not for political gain but rather for the public good,” the party said.

“Notwithstanding this, those in the opposition at that time not only distorted the facts completely to the people; but the consecutive coup government that followed unscrupulously annulled the Airport Agreement. MDP is adamant to the fact that their position did not consider the wellbeing of the nation and its people.”

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Malé night market to continue despite alleged corruption

The MalĂ© night market will continue despite the Anti Corruption Commission’s (ACC) instruction not to continue with the deal, the MalĂ© City Council has said.

Deputy Mayor Shifa Mohamed told Minivan News their legal advisors had told them that the ACC does not have the authority stop the agreement with GoMedia from going ahead.

“They asked us to stop certain things, but it has to be finalised from the court,” Shifa said.

“So according to legal officers the Supreme Court has taken a role in saying the ACC is not a place to stop any projects,” she stated.

Shifa referred to a Supreme Court verdict in September 2013 in which the apex court said the ACC does not have the authority to stop a contract between the Maldives government and a Malaysian mobile security firm Nexbis to establish a border control system.

The ACC is consequently planning to take legal action against the Council and GoMedia.

Speaking to Vnews, ACC President Hassan Luthufee said that the Go Media agreement should not be followed by any means and that the agreement’s maintenance was a direct attempt to abet a criminal offense.

“We have forwarded the Go Media case to PG (Prosecutor General) Office for prosecution. If the present MalĂ© City Council members are speaking with this intent, we have to investigate and prosecute them as well,” Luthufee said.

Council disputes corruption allegations

The ACC had stated that the agreement made between Malé City Council and Go Media was compiled in manner that favored some parties and paved way for possible corruption.

However, Shifa yesterday stated that investigations into corruption had not been carried out sufficiently, and questioned the thoroughness of the ACC’s research.

“The Major has sent letter telling [ACC] to redo the whole investigation,” revealed Shifa.

“When the ACC started looking there was one single letter, by a single councilor. The ACC have not really gone into depth,” she added. “They need to check all the documents.”

The arrangements for the market are well underway with many of the stalls already let out to traders, and stopping the plans now could damage many small business owners, Shifa said.

GoMedia has rented out 450 stalls and three canteens at the rate of MVR 4000 (US$ 259) each.

“Small business have already bought tables,” she explained, “we should not disappoint them. We have to consider the fact that agreement was signed.”

“The ACC’s main responsibility is to check if the project is going on properly,” Shifa continued.

She explained that any grievances the ACC may have should be put forth to the Prosecutor General.

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President predicts US$300 million compensation for GMR

The Maldivian government believes GMR is owed US$300 million in compensation for the premature termination of the contract to develop the Ibrahim Nasir International Airport (INIA) instead of the US$1.4 billion the company is seeking, President Abdulla Yameen Abdul Gayoom told reporters upon his return to Malé last night.

Speaking to press after returning from Singapore to attend the Maldives Investment Forum, President Yameen insisted that the arbitration proceedings over GMR’s compensation claim has not deterred investors.

The INIA development project was the most popular among attendees at the forum, he said.

“The biggest interest was for the airport,” Yameen said.

The event – which took place on April 25 – was attended by over over 160 companies and nearly 200 representatives from 16 countries, and was the first overseas investor forum organised by the Maldives.

GMR compensation claim

Speaking to the press at the airport, Yameen argued that the previous government was within its rights to terminate the contract as it “damaged state and national interests”.

But since GMR had carried out some of the development works at the airport, the government has to pay compensation, he conceded.

President Yameen said that the compensation payment would affect the state budget, but added that $300 million is a “manageable” sum.

The state-owned Maldives Airports Company Limited (MACL), which now manages the airport, is “saving up” that sum, he said.

This statement comes after GMR is reportedly sticking to the US$1.4 billion compensation claim for the abrupt termination by the Maldivian government in December 2012.

“The forceful takeover of the airport by Maldives government amounts to repudiation of a valid contract and therefore damages, including loss of future profit has to paid. Thus, GMR’s claim is $1.4 billion,” Indian media reported the Bangalore-based infrastructure giant as saying in a statement on Friday (April 25).

Investment forum

On the investor forum, President Yameen said companies were also interested in developing a trans-shipment port in the north of the country, along with economic stimulation investments in Hulhumale’.

The island is a reclamation project to the north of Male’ to cater for the housing, industrial and developmental demands of the capital.

“Alongside (interests for the airport), there was (interest) for the economic development of Hulhumale’,” President Yameen said.

“Some large Chinese companies brought us (proposals) to develop a township in Hulhumale’, in addition to different (development) components for the airport. God willing, if we can put the effort, there is a lot to be gained here,” he added.

Moreover, the Ministry of Transport is seeking investors for building four new domestic airports. They are to be established on Haa Alif Huvanadhoo, Alif Alif Mathiveri, Faafu Magoodhoo and Meemu Muli.

The government is proposing leasing one or two islands for 25 years for resort development to the investors under a public-private partnership (PPP) programme in addition to a customs duty exemption for all equipment and material imported for the airport projects.

Moreover, the government has also made an announcement seeking a developer to expand Hanimaadhoo International Airport in the north of the country.

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Parliament approves hiking airport service charge to US$25

Parliament today approved legislation to raise the airport service charge from departing foreign passengers to US$25 from July onward as part of the current administration’s revenue raising measures.

The amendment bill submitted on behalf of the government by Progressive Party of Maldives MP Abdul Azeez Jamal Abubakur was passed with 32 votes in favour.

The government anticipates over MVR100 million (US$6.4 million) in additional revenue from the increased departure tax.

Parliament has also approved other revenue raising measures proposed by the government, including hiking import duties, reintroducing the bed tax until the end of November, raising the Tourism Goods and Services Tax (T-GST), and introducing GST for telecommunications services from May 1.

A proposal by the administration of former President Mohamed Waheed to raise the service charge to US$30 was narrowly defeated in April 2013.

The 1978 law imposing the airport service charge on departing passengers was first amended under the Maldivian Democratic Party government and raised to US$18.5 for foreigners.

The imposition of a similar Airport Development Charge (ADC) of US$25 by Indian infrastructure group GMR was previously a major point of contention for the Waheed administration, which terminated the concession agreement with the GMR-led consortium to modernise the airport in December 2012.

Other bills

A raft of other bills were also passed at today’s sitting of the People’s Majlis, including a bill on the state wage policy that was vetoed by former President Waheed in December 2012.

The legislation proposes the creation of a five-member National Pay Commission chaired by the finance minister with part-time members to determine salaries and allowances for the public sector and authorise pay rises.

The bill stipulates that the commission must consider the cost of living, inflation and the consumer price index in determining wages.

Moreover, salaries should incentivise government employees to work in islands with small populations.

The commission would also formulate standards and rules for determining the state’s pay scale or appropriate salaries based on qualifications and nature of employment.

Legislation on sole proprietors and business registration submitted by the administration of former President Nasheed in 2011 as part of an economic reform package was also passed today.

According to the draft legislation on business registration, the bill seeks to ensure that businesses, partnerships and cooperative societies operating in the Maldives are properly registered; specify what kind of businesses must be registered along with procedures for registration; and oblige businesses to submit information to the Registrar of Businesses.

The bill was also vetoed by President Waheed in April 2012 citing “socio-economic” concerns.

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Oil exploration attracts investors at Singapore investment forum

The Maldives has garnered interest in oil exploration during an investment forum in Singapore.

Minister of Fisheries and Agriculture, Dr. Mohamed Shainee, told Minivan News at least one investor will be visiting the Maldives in the coming weeks to present their company profile and discuss the project further.

Over 160 companies and nearly 200 representatives from 16 countries were present at the first overseas investor forum organised by the Maldives.

Speaking at the event on Friday, Shainee assured potential investors that there was no room to refute the presence of oil in the Maldives based on seismic testing by Royal Dutch Shell.

“Those studies were carried out 25 to 27 years ago, with limited technology capable of investigating under sea. However, now we have better technology that is more capable of more exploration,” he said.

Oil has been found in both Sri Lanka and India and therefore there is a high possibility that it will be found in Maldives too, he added.

Lying just a meter above sea level, the Maldives is among the world’s most vulnerable countries to climate change impacts such as sea level rise, ocean acidification and extreme weather events.

Crude oil will diversify and stabilise the economy, President Abdulla Yameen Abdul Gayoom has said. At present, the Maldives heavily relies on tourism, which supports an estimated 70 – 80 percent of its GDP.

However, some have argued that economic benefits will not outweigh the possible environmental repercussions.

“When you take up the issues of drilling, we are concerned about the oil container tanks with unrefined fuel passing through,” concluded Executive Director of local NGO Bluepeace Ali Rilwan. “We can’t afford to go into that dirty energy.”

With this in mind, Rilwan asked, “can we avoid a disaster in the Maldives? The Maldives is a tiny island and this can have a very negative impact, the tanks are a worrying thing.”

In addition to oil exploration, the government is seeking investment in establishing a port in northern Ihavandhippolhu Atoll, land reclamation and maritime seaport in Hulhumalé, expansion of the Ibrahim Nasir International Airport (INIA) and the relocation and expansion of the central port to Thilafushi Island.

The projects for which the government was seeking investors were “designed to position Maldives to take advantage of its strategic location as a hub and gateway for commerce, innovation and creativity, linking rest of the globe with South Asia,” President Yameen said in his keynote address.

“To address investment climate and to facilitate mega investments with attractive incentive packages, a Special Economic Zone Bill will be tabled in the parliament soon. Additionally, the Foreign Investment Act and Companies Act are being revised to cater the ever increasing needs of the modern foreign investors,” he added.

Meanwhile, a Singaporean court is currently overseeing the arbitration process between the Maldives government and Indian infrastructure giant GMR in which the company has claimed US$ 1.4 billion for the abrupt termination of a concession agreement to develop the Ibrahim Nasir International Airport (INIA).

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Yameen concedes that GMR is owed some compensation

With additional reporting by Ahmed Rilwan

President Abdulla Yameen has today said the government was sure it would have to pay some compensation for cancelling the agreement made with the Indian infrastructure giant GMR to lease Ibrahim Nasir International Airport (INIA).

“The truth we should accept is that a government with all its sovereignty has given permission to a foreign party under an agreement,” said the president.

“So we believe some sort of financial compensation must be paid to them. A compensation must be given for taking the airport [from them]. What we are trying to make sure this compensation is not big but average.”

Yameen was speaking to the press before leaving for Singapore to take part in the Maldives Investment Forum – an event he described as “the first step taken towards a fresh start for the Maldives in today’s world economy”.

In November 2012, President Dr Mohamed Waheed’s cabinet declared the GMR agreement void ab initio – invalid from the outset – and ordered the developer to leave, just two years into its 25 year concession agreement.

President Yameen explained to the press today that his advisors believed that, if the arbitration panel could be persuaded that the deal had been anulled due to the airport’s national importance, the compensation would be small.

GMR had initially claimed US$1.4 billion – a figure greater than the Maldives’ annual state budget.

Yameen’s Progressive Party of Maldives (PPM) formed part of the Waheed coalition government, though it’s leader – former President Maumoon Abdul Gayoom – has since accuse Waheed of going against his party’s advice by failing to reach an amicable agreement with GMR and the Indian government.

During his first official state visit to Indian in January, Prime Minister Dr Manmohan Singh requested President Yameen to “amicably” settle the GMR airport issue.

Earlier this month, Yameen had said that the out-of-court amount sought by the infrastructure company was too great, and that he would now await the outcome of proceedings, which could take up to another two months.

The US$511 million concession agreement to manage and upgrade the airport – awarded under the former government of Mohamed Nasheed – was the single largest foreign investment in the Maldives’ history.

President Yameen will tomorrow give the keynote speak at the landmark investment forum, as he seeks to generate interest from foreign investors for five ‘mega-projects’ – one of which is the further development of Ibrahim Nasir International Airport (INIA).

As part of the president’s attempts to lure foreign investors back to the country, he has promised special economic zones which hopes will be “likened to cities in Dubai or the Emirates” and “the [business] environment we have in Singapore.”

Senior management of Singapore’s Changi International Airport visited the Maldives earlier this month, with Yameen explaining the purpose of the visit to press this afternoon.

“Changi’s management will be our final consultant with the terminal [project] and other consultancies required for the airport,” he explained. “We want to seek technical expertise and information on how to do things from Singapore Changi.”

“The project has progressed far now, Changi has expressed interest. So we believe all the supervisory and consultancy work of this terminal will be carried out by Changi.”

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