Business & Tourism – Page 22 – Minivan News

Nasheed criticises indirect taxation following amendments to import duties

Former President Mohamed Nasheed has criticised the recent amendments to customs duties, arguing that a strong economy cannot be built upon regressive taxes.

“We have noticed that indirect taxes such as import duty have a very bad impact on the economy,” the acting president of the Maldivian Democratic Party (MDP) told local newspaper Haveeru.

“The tax that is being derived from the poorest man’s toothpaste is equal with the tax levied on the richest man’s toothpaste. We do not believe that this is a smart way of generating state income,” he said.

Nasheed’s comments followed the approval of amendments to the Import-Export Act which increased import duties on a range of goods as part of the current administration’s revenue raising measures.

He told local media yesterday that history had shown progressive taxation, with greater contribution from higher earners, was the best technique to raise state revenue.

During this week’s final debate on the government-sponsored amendments, MPs of the opposition MDP severely criticised the indirect tax hikes, contending that the burden of increased prices of goods would be borne by ordinary citizens.

Once the amendments (Dhivehi) are ratified by the president, a 15 percent tariff will be reintroduced for construction material, articles of apparel and clothing accessories, silk, wool, woven fabrics, cotton, man-made filaments, wadding, special yarns, twine, cordage, ropes, cables, carpets and other textile floor coverings, lace, tapestries, trimmings and embroidery.

Tariffs are also set to be increased from the current zero percent to five percent for sugar confectioneries and diesel motor oil and raised from 10 to 15 percent for organic chemicals and compounds of precious metals, rare-earth metals, radioactive elements or isotopes.

Nasheed suggested that progressive taxation such as the Business Profit Tax (BPT) – introduced during his presidency alongside Goods and Services Tax (GST) and Tourist-GST – would produce a more sustainable economy.

These three taxes were shown this week to have contributed to nearly three-quarters of the state’s revenue in the first quarter of the year, amounting to over MVR2 billion. The introduction of these taxes has seen state revenue quadruple since 2010.

The economic policies pursued during the MDP administration also included sweeping changes to the Import-Export Act, which included the removal of duty on a wide range of items.

The Maldives Customs Service meanwhile revealed last week that its revenue in March increased by 12 percent – to MVR 139.7 million – compared to the same period in 2013 on the back of a 30 percent increase in imports.

Exports, however, dropped by 65 percent last month compared to the same period last year, and imports increased by 11 percent compared to the first quarter of 2013.

The Maldives Monetary Authorities’ latest balance of payments forecasts estimated the current account deﬁcit to have widened to US$562.5 million – representing 22% of GDP in 2014.

Other revenue raising measures to be implemented by the government include raising T-GST to 12 percent this coming November as well as the introduction of GST to telecommunications services from May 1.

Plans to increase Airport Service Charge from US$18 to US$25 appeared to be moving closer to realisation this week, with local media reporting that the measure had been approved my a Majlis committee.

In December, parliament passed a record MVR17.5 billion (US$1.16 billion) budget for 2014, prompting President Abdulla Yameen to call on the legislature to approve the revenue raising measures, which the government contends are necessary to finance development projects.

Recognising that the Maldives is in a “deep economic pit”, President Yameen vowed to slash state expenditure in order to improve government finances following his election victory last November.

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Parliament approves import duty hikes

Parliament has approved amendments to the Import-Export Act to raise import duties on a range of goods as part of the current administration’s revenue raising measures.

The amendment bill submitted on behalf of the government by MP Mohamed Rafeeq Hassan was passed with 34 votes in favour and 19 against at yesterday’s sitting of the People’s Majlis.

Tariffs will also increased from the current zero percent to five percent for sugar confectioneries and diesel motor oil and raised from 10 to 15 percent for organic chemicals and compounds of precious metals, rare-earth metals, radioactive elements or isotopes.

Custom duties for vehicle seat covers will be raised from 35 percent to 75 percent.

While custom duties for organic and chemical fertilisers and pesticides as well as for live chickens, ducks, turkey, quail, and chicks will be eliminated, duties for polythene bags and items that contain hydrochlorofluorocarbons (HCFCs) will be hiked to 400 percent and 200 percent respectively.

The tariff hikes reverses changes brought to the law when import duties for most items were eliminated in late 2011 by the administration of former President Mohamed Nasheed ahead of the introduction of a Goods and Services Tax (GST).

Import duty was also eliminated for food items – with a few exceptions such as bananas, mangoes, watermelons, and papaya to protect the local agriculture industry – as well as for construction material, fabrics and garments, paper and books, environment friendly goods, paints, floor coverings, footwear, steel, medicine, medicinal machineries and products, fertilisers, electric vehicles, cosmetic goods and domestic appliances.

During yesterday’s final debate on the government-sponsored amendments, MPs of the opposition Maldivian Democratic Party severely criticised the indirect tax hikes, contending that the burden of increased prices of goods would be borne by ordinary citizens.

In a press statement yesterday, newly-appointed Maldives Monetary Authority Governor Dr Azeema Adam predicted a rise in the inflation rate as a result of hiking tariffs.

The central bank previously estimated the inflation rate to hold steady at four percent as global commodity prices were expected to decline this year.

The Maldives Customs Service meanwhile revealed last week that revenue in March increased by 12 percent compared to the same period in 2013 on the back of a 30 percent increase in imports.

“Total revenue collected in March 2014 was MVR 139.7 million, while it was MVR 124.8 million in March 2013,” MCS said in a statement.

“Importation of fuel (such as diesel, petrol and jet fuel) shared 36 percent of total imports in March, twice the value of food items imported during the same period. Third most imported category of goods in March was machinery and electronics which accounted for 15 percent of total imports in March.”

Exports, however, dropped by 65 percent last month compared to the same period last year, which was “linked to the 97 percent reduction in the volume of exports by the state-owned Kooddoo Fisheries Maldives Ltd, whose main export is Frozen Skipjack Tuna to Thailand.”

Customs also revealed that imports in the first quarter of 2014 amounted to MVR7.1 billion, which represented an 11 percent increase compared to the first quarter of 2013.

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Newly appointed MMA governor reveals plans to strengthen economy

The newly appointed Governor of Maldives Monetary Authority (MMA) Dr Azeema Adam has stated that she will ensure firm action is undertaken to strengthen both the economy and its currency.

“We need to strengthen foreign exchange market regulatory framework and establish a sufficient monetary policy framework in order to maintain the value of rufiyaa,” she told local media yesterday.

Azeema added that the strengthening of these frameworks would also assist in reducing inflation and the rise in prices of general commodities, as well as echoing the concerns of her predecessor regarding monetisation.

“Printing money to overcome the budget deficit is something that brings down the value of the Maldivian rufiyaa. Therefore, this needs to brought to an end.”

“In order to do so, the MMA will assist the government to finance their budget deficit through a market mechanism,” she revealed.

She added that this will be difficult to accomplish without decrease government spending, while also noting the importance of the ratification of the new MMA Act which has been recently drafted.

Azeema also pledged to bring an end to dollar transactions on the black market, noting the importance of maintaining the value of local currency in a country like the Maldives which strongly depends on foreign currency.

The MMA’s recent balance of payments projections estimate that the country’s current account deﬁcit will widen to US$562.5 million in 2014, which is equal to 22 percent of GDP.

She pledged to bring down the expense of running the central bank, stating that decreasing spending throughout the state bodies is imperative to strengthening the country’s economy.

Azeema stated that, although Maldives has a comparatively high level of investments in tourism and other sectors, it has so far failed to be reflected in the country’s financial status.

Productivity increasing

Due to the rapidly developing tourism sector, productivity of the Maldives will increase by 4.5 percent by the end of 2014, she said.

“At the end of 2013 we had US$368 million. Our estimate is that this will rise to 400 million dollars by the end of this year. Looking at how much is imported from this reserve, this is the import of about 2 or 3 months,” local media reported the new governor as saying.

Dr Azeema estimated that, compared to 2013, the current account deficit of the country will increase by 16 percent this year, while the official reserves exceed this. She said that this estimate is made based on the developing tourism sector, and the increased earnings that the government is acquiring from the field.

She went on to reveal that the major work the MMA will currently undertake is to introduce new insurance services and to establish further Islamic financing instruments.

The MMA will assist banks in releasing more loans to individuals by decreasing the minimum reserve requirement that they have to keep deposited at the central bank, she said.

“We need to strengthen the financial sector through revisions, this is a work we must undertake. We do not see big investments being made in the financial sector. However, we need to attract investments into this sector too,” Azeema told the press.

The governor stated that, where required, the central bank will also work to revise necessary laws and regulations in an attempt to strengthen the financial sector. She stated that this would assist the government in obtaining funds to implement various projects, while also being of help to small and mid-level businesses.

She highlighted the importance of creating more public awareness about the financial sector as well as encouraging a mentality of keeping savings from their earnings.

She further said that the MMA would encourage the use of electronic payment systems as opposed to cash and cheques. She stated that more convenient and efficient electronic payment systems will be introduced by the central bank, adding that this would be more secure than cash and cheque transactions.

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Addu City Council passes resolution to develop guest house tourism

Addu City Council has passed a resolution to create an ‘Addu Guest House Venture’ which will develop and expand the guest house tourism industry within the city, under the guidance of a a ‘Guest House Promotion Board’.

The resolution – passed on Tuesday (April 15) – states that it is important to have the opportunity to develop guest houses and city hotels on the large joined islands of the city, and that it will benefit the tourism industry in general.

Noting that it will create more jobs and new opportunities for start-ups, the resolution stated that it will also increase the number of tourist arrival for the country.

In the past few years the guest house businesses boomed on many islands – growing from just 22 registered businesses in 2009, to 171 currently listed – particularly in close proximity to the capital, Malé.

The list of guest houses available via the Tourism Ministry shows just one registered business in Seenu atoll – home to Addu City, the country’s second largest urban area.

Recent annual figures (2012) show Malé’s Kaafu atoll was home to 39.9 percent of the tourism industry’s bed capacity, while Seenu – the country’s southernmost – had just 3.6 percent.

Addu City Council this week declared that, in order to develop the industry, the Addu Guest House Venture has to be created jointly as a business transaction by the council, members of the public, businesses, and banks.

A five-member guest house promotion board is also to be created under this resolution to represent the council and to communicate on its behalf.

The council is expected to announce applications for the board membership very soon, which according to the council will comprise of technical and experienced persons.

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.

Political supporters of guest houses have pointed out that mid-market tourism creates opportunities for small businesses while economically empowering local communities.

The current government, led by the Progressive Party of Maldives has announced alternative plans for developing mid-market tourism, with the prospect of guest house islands replacing the idea of guest houses on inhabited islands.

Tourism Minister Ahmed Adeeb has said that various businesses will invest in providing different services on these islands.

“For example, common restaurants can be managed by one party, water sports by another party, twenty rooms by one company, another twenty rooms by another company and so on. In that way, we are creating numerous businesses there,” Adeeb told Minivan News earlier this year.

Adeeb explained that the government was reluctant to market mid-level tourism as it risked damaging the country’s image as a high-end destination.

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President Yameen on economic offensive in Japan

President Abdulla Yameen has held meetings with prominent businessmen, economists, and industrialists during his current state visit to Japan.

Yameen has held meetings with the senior figures at the Japan Bank for International Cooperation (JBIC) and the Japan International Cooperation (JICA), as well as tourism and business leaders – including the president of the Hitachi company.

The second day of the president’s visit also saw a meeting with Japanese Minister for Internal Affairs Yoshitaka Shindo, with the prospect of a Japanese embassy in the Maldives being discussed.

In his meeting with the JICA governor Hiroshi Watanabe, Yameen discussed means of obtaining funds for various development projects in the Maldives. The president broached the subjects of financial assistance for the Maldives airport development project, as well as a project to be focused on the island of Ihavandhihpolhu.

He further thanked the Senior Vice President of JICA Hidiaki Domicia for the assistance that JICA has extended in the implementation of projects in the Maldives under the aid of the Japanese government.

As the coordinating body of Japan’s overseas development assistance, JICA oversaw projects worth US$450 million to the Maldives in development assistance between 2004 and 2010.

Projects benefiting from Japanese aid have included the first mechanisation of fishing vessels between 1973-76, the development of Malé’s seawall between 1987-2003, and the extension of loans amounting to US$34 million for post-tsunami reconstruction.

During a meeting with Hitachi’s President Toshiaki Higashihara yesterday, Yameen thanked the company for its cooperation with the State Trading Organisation and for its interest in energy-related projects in the Maldives.

Investment opportunities

Yameen also met with leaders of the Japanese tourism industry, including senior officials from travel agencies, travel publications, tour guides, and the media.

After providing information about current tourism development projects in the country, Yameen noted that the Maldives’ global recognition as a high level tourist destination made it one of the most beneficial areas in which foreign businesses can invest.

The president also noted the need for foreign assistance to further develop the tourism sector, reasserting that the current atmosphere in the country is peaceful after some political turbulence at the time of his taking office.

Yameen assured investors that the Maldives is currently in the collective mindset of overcoming differences, maintaining peace, and promoting development.

President Yameen also attended a forum titled ‘Maldives Investment Promotion Forum’ – organised by the Japan External Trade Organisation, and attended by senior businessmen of the country.

Thanking investors for their interest in the country, Yameen provided details of investment opportunities currently available in the Maldives.

According to the President’s Office website, he highlighted that the current government’s intention to introduce numerous incentives for foreign investors in a bid to further strengthen the country’s economy.

Earlier this month, Yameen revealed that legislation will be proposed during the next parliament which will create special economic zones, will he feels will be “likened to cities in Dubai or the Emirates”.

The new laws would enable investors to have “freeholds” in the country and allow investors “to engage in really, really long gestative projects,” he told investors.

“What we would like to confirm for the foreign investors who come to the Maldives is that foreign investors should feel that Maldives is your second home here.”

“We are going to open up the Maldives in a huge way to foreign investors. Our thirst cannot be quenched. The opportunity to foreign investors is going to be enormous. So have faith and trust in us,” Yameen said.

The president has continued to outline future investment opportunities in the country to Japanese investors this week.

The areas he mentioned include the handling of incidents that arise due to natural disasters, environmental protection, education, health, youth empowerment, sports, agriculture, human resources, security, and infrastructure development.

Together with President Yameen, Minister of Economic Development Mohamed Saeed, and Minister of Tourism Ahmed Adeeb also attended the investment promotion forum.

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GMR arbitration verdict to take up to two months

The government has confirmed that arbitration proceedings regarding the terminated GMR contract – expected to be concluded this week – may take up to two months to reach a verdict.

President Abdulla Yameen had recently stated that the government had failed to reach an out of court settlement with the Indian infrastructure giant, which is seeking US$1.4billion in compensation after the premature annulment of its 25-year concession agreement.

“But the thing is, the GMR is seeking a huge amount as compensation. This government, however, does not believe that we can – or indeed that we need to – pay such a large amount as compensation,” Yameen stated prior to his departure to Japan earlier this week.

“So their [GMR’s] decision now is to wait until the arbitration case is concluded. So we will carry on after the arbitration case is completed,” he continued.

Yameen revealed his intention to seek further foreign investment in the development of Ibrahim Nasir International Airport (INIA), with Japanese, Singaporean, and Middle Eastern investors all being courted.

The president confirmed that the arbitration case had commenced and that both Minister of Defence and National Security Mohamed Nazim and former Attorney General Azima Shakoor had attended the hearing as witnesses from the state.

“Those from our government who were handling the matter at the time have attended the first session’s hearing and provided the necessary information,” Yameen said.

New facilities

“We are not seeking just one single investor for the airport. This is because development of the airport will be a huge project,” Yameen told the media on before his departure on Sunday (April 13).

“What we are speaking about is a new airport. We want it to be an iconic building with additional runway, an additional terminal and new terminal facilities.”

The Maldives Airport Company Limited (MACL) has today confirmed that a second runway will form a crucial part of any new development – the need for which has come to the fore again this week as the state of the airport’s runway partly to blame for the bursting of landing aircraft’s tire in December 2011.

United Arab Emirates’ General Civil Aviation Authority found that the burst tire of a landing Emirates flight was partly caused by the accumulation of standing water on the runway.

The reports advised the Maldives Civil Aviation Authority to “ensure that Operators utilising Male’ airport are fully aware of the runway condition until the runway enhancements are finalised”.

Demands for a second runway – not included in the initial agreement – were among the criticisms levelled at the US$500million GMR concession agreement, before the deal was declared void ab initio (‘invalid from the outset’) by the Dr Mohamed Waheed government.

With speculation about excessive foreign influence accompanying the anti-GMR campaign prior to the contract’s termination, President Yameen has assured that overall management of the airport will stay in the hands of MACL.

New investors

“We are also thinking about making the airport into one that can carry over 5 million passengers. We want the airport to be one that can cater to tourism growth within the next 50 years,” Yameen explained this week.

“Therefore, this is a project worth at least 600 to 800 million dollars. Of the various components of the airport, we are approaching Japan to invest in terminal facilities and a terminal building. So this trip [to Japan] is not one where we are seeking a single party to develop the whole airport.”

He further stated that Vice President Dr Mohamed Jameel Ahmed had held positive discussions with Kuwait over airport development assistance while he had personally met with Saudi Arabia’s infrastructure giant Bin Laden Group, who also expressed interest in the project.

While the Minister of Economic Development Mohamed Saeed and Minister of Tourism Ahmed Adeeb are working on a concept design of the airport, the senior management of Singapore’s Changi airport were being mooted as consultants for the development.

Yameen will travel to Singapore later this month to inaugurate the Maldives Investment Forum, a government initiative to showcase ‘high level’ investment opportunities in the country, including the development of INIA.

The president has previously assured foreign investors that future investments will in the Maldives are safe, and will soon be protected by enhanced legislation.

“We are going to open up the Maldives in a huge way to foreign investors. Our thirst cannot be quenched. The opportunity to foreign investors is going to be enormous,” he told potential developers earlier this month.

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Taxi drivers protest against implementation of new regulations

Taxi drivers in Malé are today protesting against what they regard as “strict” and unfair new regulations which were to be implemented today.

Key concerns raised by participants included the issue of ‘taxi-top’ vacancy signs, and not having similar legislation for all land transport, including lorries and pickups.

Many held placards with statements such as ‘Insurance is useless’, ‘Establish equal policies for all land transport’, ‘Stop making medical reports of drivers, stop requesting police records of drivers’, and ‘Stop enslaving drivers’.

State Minister for Transport Ahmed Zubair has argued that drivers and taxi centers were consulted throughout the process and that their concerns were addressed.

Protesters demanded a change the regulation and called for the Transport Minister Ameen Ibrahim’s resignation.

The protest began this morning as a strike, and later turned in to a protest march with taxi drivers taking to voice their concerns.

Some taxi drivers who maintain the regulations are reasonable, refused to take part in the protest – continuing their service through out the day – were threatened by the protesters.

The Maldives Police Service confirmed reports of threats to taxi centers, and said that two people were arrested from the protest – one for trying to attack a police officer and obstructing police, the other person for stopping a taxi on the street.

Concerns

A general statement written by protesters said the purpose of the protest was to oppose “the creation of strict regulations to make things difficult particularly for taxi drivers, and forcing to follow such regulations.”

Some drivers argued that the ministry should ensure the vacancy boards that fit their standards are available in the Maldives, noting that attaching such a board requires drilling a hole on top of the cars.

State Minister Zubair today said that the implementation of the whole regulation will not be delayed any further, saying that the ministry was not specifically targeting the taxi drivers, but was planning to introduce similar regulations for bus services and another for resolving the issue of parking.

Responding to the complaints about the vacancy signs, the minister said that magnetic boards were available and that, in order to give more time for taxis, the ministry has given another month (till May 15) to fix the boards.

He said the regulation would also allow for the penalisation of those taxis who do not provide the service.

Police today announced that action will be taken against those violating the new regulations – with the exception of the vacancy board placement – starting today.

Meanwhile Maldivian Red Crescent has announced that their medical emergency vehicles will be available for emergency transport during the taxi drivers’ strike. MRC transport contact number is 7917009.

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98 percent of tourists would recommend Maldives to others, visitor survey reveals

With additional reporting by Daniel Bosley

The Maldives Visitor Survey 2014 has revealed that 98 percent of tourists would recommend the Maldives as a holiday destination to others.

The survey was conducted by the Ministry of Tourism and other industry stakeholders from March 18 to April 5, the results of which were released yesterday (April 14) at the Nasandhura Palace Hotel.

Results of the survey showed that a significant percent (31%) of tourists to the Maldives are repeat visitors. The majority of the tourists visit the Maldives with either a partner (55%) or with family (28%).

A separate survey earlier in the year, conducted by online reservations group Agoda, revealed the Maldives to be regarded as the ideal honeymoon destination by those surveyed.

Of the significant nationalities represented in this month’s survey, more Japanese and Indian visitors were on their honeymoon than any other group, with the rest citing rest and relaxation as their main reason for visiting.

The prominent role the internet plays in the industry – as the media for source of information and travel booking – was further revealed in the recent survey, as 25 percent of the respondents said they learnt about the Maldives via the internet and 53 percent said they booked their holiday online.

The Maldives’ natural environment which includes underwater, beach and the weather were the main (52%) motivators for visits to the Maldives.

More Japanese and Chinese visitors cited the country’s reputation as the reason for their visit than any other national group, while Russian and Indian respondents were the most interested in the privacy provided.

85 percent of those surveyed stayed in one of the country’s 105 single island resorts, which still dwarf the size of the safari boat (numbering 160) and the, quickly growing, guest house sectors (79).

The visitor survey was conducted at the departure terminal of Ibrahim Nasir International Airport from 18th February to 5th March 2014. Questionnaires were prepared in 7 languages, with a sample size of 1,800.

45 percent of respondents reported travelling by speedboat to their resort, with 80 percent reaching their destination within an hour – figures which highlight the concentration of resorts in the central atolls, a situation the government has been urged to amend in favour of development in the out atolls.

Continued growth in the tourism industry was revealed by authorities in February, with tourist arrivals growing by 17 percent between 2012 and 2013 – surpassing one million visitors for the first time.

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, with the industry’s contribution to national GDP estimated to be as high as 80 percent.

The current government hopes to expand bed capacity in order to achieve the current Tourism Masterplan’s projection of 1.75 million arrivals by 2021.

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Growing for the future: Hydroponics in the Maldives

Agricultural practices are ingrained in the traditional Maldivian lifestyle. However, Mohamed Shafeegu – Director of Seagull Maldives – argues that with space at a premium and most foods imported, the art of agriculture is at risk of being lost forever.

“They will forget,” warns Shafeegu, “before they know what to do, food security will be a big problem – it will come.”

The answer to a sustainable farming future, according to Shafeegu, is hydroponics.

Hydroponics is a branch of horticulture which uses water to deliver minerals and nutrients to plants rather than soil – allowing farmers to grow crops in places where soil is arid or unyielding.

“I think hydroponics is our future. The demand [for food] will increase with tourism, so there is a big future for agriculture. If we can plan, we can do this.”

Seagull currently operates one of the Maldives’ few farming and fishing operations on Mafaahi island – the produce of which is used to stock their cafe and supermarket in the capital Malé.

The company grows a variety of fruits and vegetables, as well as making boats, keeping goats, and fishing. According to Shafeegu, this is one of only two islands that are carrying out an agricultural project of this scale.

“They said ‘nobody can do this’ – so we tried to do it”

With space at a premium, and much of the land barely arable, the Maldives is a challenging place to grow food. Currently the Maldives imports the majority- an estimated 90% – of its food from neighbouring countries.

The company’s project on Mafaahi it one of the only businesses to be growing its own food – and with 41 different varieties of fruits and vegetables the operation seems to be a success.

The key to the fruitful harvest, according to Shafeegu, is a hydroponics model which they brought from Australia.

“We studied in Australia, and I was doing engineering. We didn’t study agriculture,” revealed Shafeegu. “The reason we did agriculture was for the challenge – because they said ‘nobody can do this’, so we tried to do it.”

As well as the hydroponic system, Seagull brought in an Australian consultant named Graham Evans who helped to evaluate the business. In his review of the Mafaahi establishment in 2008, Evans praised the island’s move towards a sustainable and environmentally friendly agricultural system.

“Changes being made on Mafaahi with the introduction of hydroponics to maximize production with limited resources is commendable. The installation of the very latest solar technology on Mafaahi for pumping water from ground wells has immediate application in many locations throughout the Maldives,” wrote Evans.

In addition to environmental benefits, the effects of the Seagull hydroponics programme can already be seen in the cost of living.

“When we started in 1996, a chilli [was] 6 rufiyaa,” Shafeegu explained. “Now the chilli is around 2 rufiyaa.” Because of these benefits, people are already starting to see the benefits of localised agriculture, he contended.

Water – a precious resource

The only limitation on the potential of hydroponics is water itself, stated Shafeegu.

“We need a lot of water. Now the system we are doing in Mafaahi- we need around 2 thousand tons of water in storage. Because in the rainy season, we get a lot of rain from the roof.”

“If we can desalinate water, it costs a lot of money, but if you can go solar it will be much better.”

Desalination continues to be a huge issue in the Maldives. The lack of fresh drinking water in the country’s 190 inhabited islands – made worse with the contamination of groundwater following the 2004 tsunami – leaves most communities reliant on rainwater and vulnerable to shortages during the dry seasons.

Pioneering attempts to desalinate water using the excess heat from electricity generation have recently been launched in Kaafu atoll, although they remain in their infancy.

“Because we have done 20 years of agriculture, now the island is suffering, so we have to go for another form of irrigation. We put a line, with only a very small amount of water, given just to the roots. Now what we do is we take the pump and put water there, and a lot of water is wasted. So we have to really do a lot of quality control on the water.”

He illustrates the seriousness of this issue with a story about a neighbouring island Thoddoo, and their mis-use of water supplies.

“What has happened to this island is they have done extensive agriculture without scientific methods – what has happened now is the whole water system has gone.”

“They put chemicals in the water, and when you see people there they have white patches on them, from the chemicals – and kidney problems as well. So they are misusing because the demand is so high. And so, it [the environment] is getting destroyed, the control is not there, awareness is not there.”

The future for agriculture

Seagull is currently bidding to extend their lease on Mafaahi, which is due to expire in June 2014.

” Now we are in a very critical situation, and the water is gone now. But we can’t invest in the future, as we are almost at the end of the lease now. I think if we don’t give to us, I don’t know to whom they will give.”

“So I think the only thing is hydroponics – the government has to invest in this,” confirmed Shafeegu.

“If they don’t do that I think we will even lose the backyard farming [a traditional farming practise on local islands]. And we will not have anything to eat. Food security will be finished. Now we have a good food security based on this backyard farming, now I think it’s going to a different level.”

The Maldives has previously been described as one of the most vulnerable countries in the world to climate-change related food security issues, due to its dependence on fish stocks regarded as likely to migrate with changing conditions in the oceans.

“They [Maldivians] will forget. I think what will happen is, they will forget even to grow their own plants. Before they know what to do, food security is a big problem, it will come,” says Shafeegu.

“But I think we can grow enough, if we can plan.”

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