Category: Business & Tourism

Maldives business news

MIRA to collect additional MVR110 million from telecoms tax

The Maldives Inland Revenue Authority (MIRA) expects to collect an additional MVR110 million (US$7.1 million) per year from taxes on the the telecommunications sector.

MIRA announced this week that telecommunications services will be subject to Goods and Services Tax (GST) – currently at 6 percent – from May 1.

The move comes as the government continues to introduce new revenue raising measure to address the MVR3.4 billion (US$224 million) shortfall in this year’s record MVR17.95 billion budget.

On Monday (April 14), the People’s Majlis is set to consider amendments to the Import-Export Act which propose raising custom duties on a number of items from the current zero rate to five, 10, and 15 percent or higher.

The items include diesel, sugar, sweets, cotton, rope, carpets, textiles, fur, man-made filaments, ready-made garments, and steel.

This week has also seen MIRA release its March revenue figures, which show an increase of 22 percent compared with the same month last year.

March’s figures were distorted, however, after after February’s GST payment date was extended into March as the deadline fell during a holiday.

The figures show that 54.8 percent of revenue came from GST, which includes Tourism Goods and Services Tax (T-GST) – scheduled to rise from the current 8 to 12 percent in November this year.

Last month’s figures showed a marked improvement on the previous month’s collections after the Majlis’ failure to renew the tourism bed tax in December had resulted in reduced earnings during January (reflected in February’s collections).

After the Finance Minister Abdulla Jihad warned that this loss of income could amount to US$6million month, the decision was made to reintroduce the bed tax – charged at a flat rate of $8 per bed night – until November this year.

Bed tax amounted to over US$4.5 million in March, or 7.1 percent of MIRA’s collected revenue which came to MVR938.2 million. Over 75 percent of March’s income was received in US dollars.

The authority’s figures for 2013 showed an income of MVR8.7 billion – of which 60 percent was denominated in dollars.

Despite this foreign currency income, however, dependence on imported goods results in a persistent dollar shortage, with just 2.7 months worth of reserves remaining at the end of February.

Proposals to increase government revenue were debated during February’s emergency Majlis sessions which also resulted in the requirement that resort lease extensions be paid within 2 years.

Additionally, the government has suggested that the Airport Service Charge, which has seen MIRA collect US$7.9million from foreigners leaving the country this year, be increased by 38 percent.

A World Bank report at the end of 2013 urged the government to reduce spending in order reduce the “unsustainable” public debt which currently stands at 81 percent of GDP, and could rise to 96 percent by 2015.

“Maldives is spending beyond its means and financing the budget risks affecting the real economy,” the report said.

Meanwhile, the outgoing governor of the MMA in December called for the state to reduce expenditure and to cease from printing money.

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Government to address pay discrepancies as civil servants plan strike action

The Maldives Civil Servants’ Association (MCSA) has discussed a potential strike on April 20 should the government fail to address its concerns – mainly concerning pay discrepancies.

“First we want to find a solution through dialogue with the government. After that, if we have to, we will go on strike. And we are confident if we go on strike ninety percent of civil servants will support it,” MCSA President Mohamed Shaugee said.

Stating that the past three governments and parliament should take responsibility for the delay in setting a minimum wage, Shaugee said “the state as a whole has failed”.

President Abdulla Yameen is concerned about the issue of pay discrepancies and will find a solution through discussions with relevant parties, President’s Office Spokesperson Ibrahim Muaz Ali has said today.

“This is not a president who makes decisions based on his personal views alone. There will be discussions. The views and sentiments of the civil servants, doctors, and everyone will be considered in reaching a decision in this matter,” said Muaz.

Civil Servants’ Strike

“Even the Civil Service Commission has failed to protect the rights of civil servants and ensure there is no discrimination [with regards to pay],” said the MCSA’s Shaugee.

“We have discussed this with them, and they said they are working on resolving it. But it is hard to believe as we have been talking about this for the past six years.”

Responding to the civil servants’ plans to go on strike, the Civil Service Commission (CSC) issued a press release today reminding workers of the mandatory steps to be taken prior to a strike, which include filing a complaint with the Labor Relations Authority and giving written notice to the employer three days prior to any strike.

Employees who contravene this regulation can be fined between MVR10,000 – 50,000.

The Teachers Association Maldives (TAM) which led the teachers’ black protest earlier this week  has also threatened to go on strike as a last resort in their fight to resolve pay discrepancies.

President of the association Athif Abdul Hakeem said that, while no official discussions have taken place with the government since the protest, the teachers’ steering committee and focal points will meet this Friday to decide their course of action.

“We have been talking about [minimum wage] since the association was formed in 2008. We have been focusing on two major issues, one is resolving pay discrepancies. Equal pay. Second issue is improving the education sector in general, including resources, training and standards of teachers,” said President of TAM Athif Abdul Hakeem.

Athif noted that with parliament majority, the government can easily change things if there is a political will.

“If [President Yameen] wants to do those things for us, the means are there now. I believe it can be done and it should be done.

The demand for a minimum wage has been raised by Tourism Employees Association of the Maldives (TEAM) as well.

Minimum wage

The Employment Act of 2008 mandated the establishment of  a salary advisory board shall be established to advise the government on the appropriate minimum wage, though no government has yet fulfilled this requirement.

The pay advisory board had been established in September 2008 by President Maumoon Abdul Gayoom and again in January 2009 by President Mohamed Nasheed, with no minimum wage resulting.

In May 2011, Nasheed announced his intention to set a minimum wage within a year, reconvening the pay advisory board.

Shortly after Nasheed’s initial promise, a number of business groups led by representatives of the Maldives Association of Construction Industry and the Maldives Association of Tourism Industry met to discuss the issue, determining that a minimum wage was “not important for the Maldives at the moment.”

Speaking at the press conference organised by the business groups, leader of the Jumhooree Party and Chairman of Villa Group Gasim Ibrahim said that setting a minimum wage suddenly without a good policy would destroy industry.

His thoughts were echoed by Ahmed Shiyam, Chairman of Sun Siyam resorts and leader of the Maldives Development Alliance.

Similar comments were made by current Deputy Leader of PPM Ahmed Adeeb, who at the time spoke as the treasurer of Maldives National Chamber Of Commerce and Industry.

Adeeb said that it would create great challenges for businesses if an equal minimum wage is set for both migrant workers and locals.

In December 2012, parliament passed a bill on the state wage policy which promised to resolve public sector pay discrepancies through the creation of a National Pay Commission.

The bill is still in the parliament’s economic committee, however, after being sent back for reconsideration by President Dr Mohamed Waheed, after issues were raised regarding which branch of the state would determine wages.

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Arbitration proceedings in GMR case to begin within the week

Proceedings in the US$1.4 billion GMR arbitration case will begin this Thursday, local media has reported today.

Officials at the Attorney General’s Office told Minivan News that, while they could not confirm the precise dates, representatives of the office working on the case are currently in Singapore.

Citing sources within the government, media has reported that both the government of Maldives and the state-owned Maldives Airports Company Limited (MACL) will be represented at the hearings which they have said will begin on Thursday (April 10) for six days.

The case was filed following the premature termination of the a 25-year concession agreement to develop Malé’s Ibrahim Nasir International Airport (INIA) by the government of President Dr Mohamed Waheed in December 2012.

The Attorney General’s office has earlier stated that the Maldives will be represented by Singapore National University Professor M. Sonaraja, while former Chief Justice of the UK Lord Nicholas Addison Phillips will represent GMR.

The arbitrator – mutually agreed upon by both GMR and the Government of Maldives – is retired senior UK Judge Lord Leonard Hubert Hoffman. Both GMR and the government have earlier stated that arbitration proceedings will be concluded around May this year.

In 2010, GMR Male International Airport Pvt Ltd, owned by GMR-MAHB consortium, was awarded a concession contract to manage INIA in an investment worth US$511 million – the largest in the Maldives history.

In December 2013 President Waheed’s government prematurely terminated the concession agreement claiming that it was ‘void ab initio’, or invalid from the outset.

The management of INIA was returned to the state-owned MACL which at the time was still responsible for some aspects of airport operations.

After an injunction blocking the Maldivian government from voiding the agreement was overturned by the Supreme Court in Singapore in June 2013, GMR initiated the arbitration process claiming US$1.4 billion in compensation for “wrongful termination”.

During the second round of procedural hearings in August 2013, the tribunal acceded to GMR-MAHB’s request to split the proceedings in two – firstly determining liability, before quantifying the amount of compensation to be paid separately.

The proceedings will consider GMR’s claim is for compensation as per the termination clause of its concession agreement, a parallel claim for loss of profits over the lifespan of the agreement due to its termination, and the Maldives government’s counter-claim for restitution should the tribunal decide in its favour.

Indo-Maldivian relations appeared to have be strained following the termination of GMR contract, although bilateral relations have improved with the election of President Abdulla Yameen.

Indian Prime Minister Dr Manmohan Singh has since requested President  Yameen to “amicably” settle the GMR airport issue.

Speaking to local media, Attorney General Mohamed Anil has earlier suggested the government had a strong case in the arbitration proceedings.

In separate Singapore-based arbitration proceedings, one of the project’s lenders, Axis Bank, was said to have sought payment of US$160 million for a loan guaranteed by the Maldivian Finance Ministry. These reports were subsequently denied by the government.

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Government assures even resort distribution following Haa Dhaalu petition

The Tourism Ministry has assured that the development of resorts will take place throughout the atolls following an online petition calling for tourism growth in Haa Dhaalu.

Placed on the Avaaz website last week, the petition calls upon the government of President Abdulla Yameen to alleviate the atoll’s economic and social problems by bringing resorts to the area.

“It has been over 40 years since the tourism industry flourished in Maldives. However, the atoll with approximately 20,000 people has not yet got the opportunity to enjoy the economic benefits of this sector,” read the petition.

Noting that Haa Dhaalu is the only atoll not to have any operational resorts, the petition argues that development of the region’s “pristine uninhabited islands” would halt the “mass migration” to the capital Malé, which was “tearing up the social fabric of our society”.

“We have waited long enough to enjoy the success and development that tourism industry has brought to other regions of the Maldives,” the petition argues.

“Hence, on behalf of all the people from Haa Dhaal Atoll, we humbly ask the government not to exclude us from this prosperous and growing industry.We urge the government to give the utmost importance to solve the issue of income disparity caused by uneven development of tourism industry in Maldivian atolls.”

The Maldivian economy is heavily dependent on tourism, accounting for an estimated 80 percent of GDP, generating 38 percent of government revenue in 2012. Tourists arrivals grew by 17 percent between 2012 and 2013.

In response to the petition, State Minister for Tourism Ahmed Musthafa Mohamed told Minivan News today that the government’s promises to develop ten resorts a year would include Haa Dhaalu.

“I can’t comment on previous governments but this government in their manifesto had mentioned that they are planning to develop ten new resorts each year – I’m sure sure that developments will be throughout the Maldives.”

Musthafa noted that a lot of issues affected the location of developments, with the issue of transportation in Haa Dhaalu – part of the country’s northernmost natural atoll, Thiladhunmathi – having been a longstanding one.

Thought the Maldives is now home to over one hundred island resorts spread across 26 natural atolls, the majority of resorts are clustered around the country’s capital Malé and the country’s main international airport.

Despite the opening of Hanimaadhoo International Airport in Haa Dhaalu atoll two years ago, the continued lack of economic activity has led to significant local support for a second regional airport in nearby Kulhudhuffushi.

While the new development threatens to destroy much of the island’s mangrove habitat, recently re-elected island MP Abdul Ghafoor Moosa has previously argued that his constituents’ economic concerns outweighed the environmental.

“Over fifty percent in the north are below the poverty level,” Ghafoor told Minivan News in January. “Still they need economic activity. If they don’t get it, it’s very difficult to survive.”

Haa Dhaalu “unnoticed or perhaps unheard”

The Avaaz petition – which has received over 460 signatures – argues that, despite its relatively high population of 20,000 people, the atoll had gone “unnoticed or perhaps unheard” by consecutive governments.

“The state of our local economy is a great concern for the people of Haa Dhaal Atoll. More importantly, the absence of tourism industry within this atoll has become a major barrier for economic and social development.”

The petition goes on to suggest that the limited local opportunities in the civil service, fisheries, and agriculture had failed to provide enough employment opportunities.

“We do understand that three of our islands have been given for resort development but it has been over 12 years without any of them being opened for tourists. This has cost 2,000 jobs that was promised for us with these resorts.”

The 2013 Tourism Yearbook produced by the Tourism Ministry shows that three resorts are currently under development in the atoll, although only one had been given an estimated opening date – for December this year.

Reasons for the failure to develop secondary tourism hubs in the north and south of the were addressed in the ministry’s ‘Fourth Tourism Master Plan – 2013-2017’.

The document explained that historical growth patterns in the tourism industry had centred on the Malé area after private investors sought greater economies of scale. The introduction of sea planes – expanding the area serviceable from Ibrahim Nasir International Airport – had further delayed regional expansion.

“If, as the last two masterplans strongly suggested, the suitable islands around the Malé’s hub are now more or less fully developed, the time has come to give priority to the secondary hubs,” read the document.

Source: Fourth Tourism Master Plan - 2013-2017
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Tourist arrivals rose six percent in February

Tourist arrivals in February increased by five percent from the previous month and six percent in annual terms, according to the Maldives Monetary Authority’s (MMA) latest monthly economic review.

“The annual increase was due to the rise in the number of arrivals from Asia and Europe,” the central bank’s monthly report noted.

While total bed nights in February rose five percent compared to the same period last year, the occupancy rate rose three percent from February 2013 to 89 percent this year.

The average duration of stay however “declined marginally in annual terms during the review period,” the report stated.

The MMA had previously revealed that tourist arrivals rose 17 percent in 2013 compared to the previous year “mainly due to the large increase in tourist arrivals from China, coupled with a slight growth in arrivals from Europe.”

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.

In November 2013, the Finance Ministry revealed that the tourism industry’s GDP growth in 2012 declined by 0.1 percent following 15.8 percent growth in 2010 and 9.2 percent in 2011.

Despite negative growth in 2012, the Finance Ministry estimated that the industry would have expanded 5.5 percent in 2013 and forecast a growth rate of 5.2 percent for this year.

The average duration of stay has however fallen from 8.6 days in 2009 to 6.7 days in 2012, and 6.3 days in 2013.

According to the annual tourism yearbook published by the Tourism Ministry, the average occupancy rate of all tourist establishments in 2012 was 2.5 percent below the previous year at 70.6 percent.

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.

Meanwhile, in the second largest industry, the volume of fish exports increased by nine percent in February compared to the previous year “largely contributed by the increase in the volume of fresh, chilled or frozen tuna exports.”

“However, earnings from fish exports declined by 25 percent during the same period, due to the fall in both the volume and earnings from canned or pouched tuna exports,” the review revealed.

“Additionally, earnings from yellow fin tuna exports also declined during this period compared to 2013.”

The rate of inflation – measured by the annual percentage change in the consumer price index in Malé – rose to 3.4 percent in February from 2.6 percent in January.

“This was largely due to the increase in fish prices,” the report explained.

“Similarly, the rate of inflation increased in monthly terms during February 2014, which was also due to the rise in fish prices.”

Public finance

The economic review noted that government expenditure “more than doubled” in January to MVR1.9 billion compared to the same period last year.

Total revenue fell by 11 percent to MVR1 billion “largely due to the 27 percent decline in business profit tax (BPT) [receipts].”

“Additionally, non-tax revenue also fell, owing to the significant decline in resort lease rent. As for the increase in expenditure, it was mainly due to the increase in subsidy payments,” the report stated.

As a result of “increased investments in T-bills by commercial banks, other financial corporations and public non-financial corporations,” the review noted that the total outstanding stock of government securities – treasury bills and bonds – rose nine percent in annual terms and 10 percent in monthly terms during February.

The trade deficit meanwhile narrowed by 29 percent during February compared to the previous year.

“This was due to the significant decline of 26 percent in imports which off set the 16 percent decline in exports. The decline in imports was contributed by the fall in petroleum products,” the report explained.

“Gross international reserves increased in both monthly and annual terms by 2 percent and 13 percent respectively and reached US$391.1 million at the end of February 2014. Reserves in terms of months of imports also rose in both monthly and annual terms to 2.7 months at the end of the same period.”

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The Maldives’ first 24 hour Hackathon promotes talented Maldivian developers

The Maldives’ first ever Hackathon, organised by local not for profit Kickstart, has concluded today in Malé City Hall.

A Hackathon is an event that brings together web developers from the local community to create new software or applications. The Hackathon hopes to inspire participants to develop products that could have a high social impact, or ‘kickstart’ a viable business.

The 24 hour event – which has attracted 40 local developers – started on April 4 2014 at 4pm and concluded today at 4pm. Software developers have come together at the event to work on a variety of interesting and inspiring projects – competing with each other to win a set of prizes sponsored by numerous partners.

Starting in the mid to late 2000s, Hackathons have become significantly more widespread worldwide, being held as a means to quickly develop new software technologies, promote local software developers and to locate new areas for innovation and funding.

According to the event website, the Hackathon enables people to “give back to the community, solve a problem, change lives, and contribute to the open-source world.”

Speaking at the inauguration ceremony on Friday, one of the organisers Ahmed Riyaz ‘Dadi’ Mohamed said that there is no industry for software and application development in the Maldives, but there are very talented Maldivians at it, reported local media Haveeru.

According to the rules, participants may work on any type of project and are free to use any tools, programming languages, architecture and hardware of their choice.

Projects so far range from an app to facilitate traffic police and immigration authority work, to an app for checking hospital and clinic queue numbers and announcements

Vnews’ creative editor Mohamed Afzal is developing an app to facilitate the transport system. Afzal said that ferry schedules will be made available with the app.

“When guesthouse businesses are expanding at such a fast rate, such an app would really help the many tourists that come to the Maldives. With this app they will not have to roam around lost and aimless,” he explained to Haveeru.

Any software and systems developed at the hackathon will remain the property of the respective developer. Developers may choose to release their project as open-source software with a license of their liking, or keep their project private or may offer it for sale.

The winners of first and second  and third prize will be awarded MVR15,000, MVR10,000 and MVR 5,000, respectively. The National Centre for Information Technology has decided to award two special prizes of MVR8,000 to a participant below the age of 21 and to a female developer.

Winners will be selected through peer voting after the presentations at the end of the event.

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Foreigners’ enrollment extended while Majlis considers amendments to Pensions Act

The Maldives Pensions Administration Office (MPAO) has extended enrollment for foreign employees onto its retirement pension scheme until May 15 following an amendment introduced in the Majlis earlier this week.

The enrollment of foreign workers into the scheme – mandated by the first amendment to the 2009 Pensions Act – was scheduled for completion today (April 1).

“We had decided that the date of enrollment should be before 1st April 2014, but now there is a proposed amendment to the Pensions Act in the parliament to make it voluntary for foreigners,” said MPAO Director Ismail Sujau.

“We are giving the delay for one and a half months for foreigners to complete their enrollment and also pay the contributions,” he added.

Sujau confirmed that the scheme will require a contribution of seven percent of employees’ earnings, matching a seven percent contribution from their employers.

The collection of contributions will be still be collected by employers before the end of April, to be handed over to the pensions office by May 15 as originally planned, he explained.

The proposed amendment – submitted by Maavah MP Abdul Aziz Jamaal Abubakr earlier this week – has been welcomed by many expatriates who fear they will struggle to reclaim their contributions upon leaving the Maldives.

“My biggest concern is not getting our money back when we leave, and if we do get it back, getting it back in rufiyaa,” said Varsha Patel, a teacher at Lale Youth International School in Malé.

“Why don’t they just call it an income tax rather than pension?” asked former teacher Rachel Evans*, aged 35.

“Nobody is dumb enough to believe we’re ever going to see that money again. It takes six months to get work visas processed. No way will they ever be able -or willing – to refund this pension at the end of a foreigner’s contract,” she added.

After submitting the amendment this week, Abubakr told local media he felt it would be better for both employees and employers to make the scheme voluntary for foreigners.

“Its enforcement may create difficulties for the employee – it may even result in monetary problems. If he can’t attain his money when he is about to leave the country, then he would face many difficulties. That would even be against his rights,” the Maavah MP told Haveeru.

Contribution concerns

Speaking with Minivan News today, Sujau assured that the regulations allowed for the retrieval of funds, but admitted that specific details of the rebate mechanism were yet to be decided upon.

“There has been a lot of concern – we understand that – even when we have had so many public information sessions,” he said.

“We have heard many concerns, especially when they withdraw the funds. We are collecting the funds in Maldivian rufiyaa and definitely we are paying out in Maldivian rufiyaa so they have a concern because local currency they make not be able to take it back and trade. They can only trade to dollars or some other foreign currency.”

Sujau said that the contributions will be transferred to rufiyaa denominated accounts, or given out in cash, though he acknowledged that transfers to foreign currency accounts had not yet been organised.

“That arrangement we have not been able to make yet. This something we will look into as it progresses.”

A heavy import-export imbalance in the Maldives results in a perennial foreign currency shortage, while a dominant tourism sector – which deals almost exclusively in US dollars – results in a weak local currency.

“What’s the point of them refunding a worthless currency when they could just call it an income tax and keep the money”, asked Rachel.

Meanwhile, Varsha – 26 -suggested that employees had been given inadequate notice of the scheme and insufficient information about how to reclaim contributions.

“We were not really given enough notice – I was only told last month. I’m not very happy to be having a pay cut for no reason.”

After the introduction of the 2009 Pensions Act, the initial regulations made no distinction between local and foreign employees – who were both included in the first phase of the scheme for public sector workers, explained Sujau.

However, just prior to the adoption of private sector workers into the scheme in  May 2011, an amendment was passed requiring separate regulations for foreigners to be drafted within 12 months, and for enrollment to be completed within three years.

Regarding complaints about the scheme, Sujau noted that his office was responsible only for the practical application of governmental decisions.

“As far as the MPAO is concerned, we are an implementing agency, we don’t make policy – we just adopt whatever is in the Pension Act and follow,” he said.

*Name changed as individual wished to maintain anonymity

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Sheesha brothers file case to retrieve stolen funds from State Bank of India

The Sheesha brothers have have filed a case with the Civil Court to implement the court’s January 16 ruling which had ordered the State Bank of India (SBI) to pay them MVR13.5 million plus interest within one month.

During a press conference held yesterday the brothers and their lawyer Abdul Nasir Ibrahim revealed that SBI had not paid the money to the company according to a Civil Court ruling, and that the court had now accepted the case.

On January 16, the Civil Court had ruled that SBI had to pay the brothers’ motorcycle importing company MVR13.5 million outstanding from the total MVR18 million that had been discovered missing from its account in November 2011 after a series of unauthorised transfers.

Nasir said yesterday that he had met with SBI before filing the lawsuit and that the bank had told him that it would transfer the money only if the Civil Court deemed that the previous court ruling should be implemented.

Nasir told the press yesterday that, although SBI had the right to appeal the Civil Court ruling at the High Court, ruling was now in existence and had to be implemented unless the High Court rules otherwise.

Having met with the Maldives Monetary Authority governor – then Dr Fazeel Najeeb – regarding the issue, Sheesha’s lawyer had been told to find a solution through the courts. Nasir also called on the MMA to take action against SBI for not implementing the Civil Court’s ruling.

Following the discovery of the unauthorised removal of the funds, the company – owned by Ahmed Hassan Manik, Hussain Husham, and Ibrahim Husham – told local media that the money had been transferred to a Bank of Maldives account using a forged document faxed to SBI with Manik’s name and signature.

The brothers said they would sue SBI and requested that the bank take full responsibility for the theft – which had comprised of two transactions totalling MVR18 million.

The Prosecutor General’s Office pressed charges against seven people in connection with the case in May 2013, including a retired Maldives National Defence Force (MNDF) colonel, and two staff members from SBI.

In November 2011, the Criminal Court issued an Interpol red notice to apprehend three persons suspected to be involved in the case.

Local newspapers at the time reported that Colonel Shaukath Ibrahim’s bank account was used to transfer the money and to withdraw it.

Yesterday, Sheesha’s lawyer told the press that the Civil Court had ruled SBI had neglected its responsibilities and that its negligence had caused the loss of the company’s MVR18million.

Of the total MVR18 million stolen, local media has reported that the company was able to recover MVR4.4 million from the Bank of Maldives account that the money had been transferred to.

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STO’s Hulhumalé hotel to be completed in one year

The State Trading Organisation (STO) – Maldives’ primary wholesaler – has told local media that the five-star hotel it is developing in Hulhumalé will be fully completed in 12 months’ time.

Managing Director Ali Azim told Sun Online that he expected some rooms to be completed and available for use by January 2015.

The original contract for the development of the 250-room Radisson Blu Hotel was signed between the STO and the US Carlson Group.

Financial constraints delayed the start of the project until 2011, while the STO signed a US$32 million syndicated loan agreement in October 2012 to finance the development.

Full speed has been resumed on the construction after a further slowdown last year, Azim told Sun.

In 2012, then STO MD Shahid Ali told local media that the organisation needed at least “at least three resorts and one hotel” to meet its demand for foreign currency at a time the country was facing a ongoing dollar shortage.

“We are trying to a find a way to earn the foreign currency we need without relying on another party for it,” Shahid told Haveeru.

The Maldives grapples with a foreign currency deficit due to a heavy import-export imbalance. Goods from overseas must be purchased with foreign currency, but the Maldives has little ability to earn this outside the resort industry, which is thought to account for around 90 percent of the country’s foreign exchanges.

Since that time, new President Abdulla Yameen – who replaced Shahid soon after assuming office – has declared the STO bankrupt.

“Not only does STO not have dollars, it does not have Maldivian Rufiyaa either. Funding the oil import through STO is now a burden for the state,” said Yameen last November.

The STO sparked fears of an impending oil shortage crisis in early November, after Shahid warned the company would run out of oil in a matter of days if it did not pay some of its US$20 million debt to suppliers.

Shahid told an emergency meeting of parliament that government-owned companies had failed to pay the STO the almost US$40 million it was owed, and appealed to the central bank to use the foreign currency reserves to bail it out of its debt.

After his appointment as MD, Ali Azim announced plans to cut operational costs by MVR 50 million in 2014 (US$ 3,242,542).

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