Air Asia ex: low-cost carrier suspends Maldives operations due to “challenging” conditions

Air Asia X has announced it will be suspending all operations to and from the Maldives from March 1, citing “challenging business conditions” both in the country and in the wider region.

“Despite our efforts, external factors such as the depreciation of Asian currencies against the US dollar and the chronic lack of hotel room supply in Maldives resulted in cancellation of thousands of bookings by travel operators,” said Azran Osman-Rani, CEO of AirAsia X – the low-cost carrier of the AirAsia Group.

“As part of our strategy to operate more efficiently, the airline will deploy our aircraft to routes with the right level of demand to be financially viable.”

“We have been very grateful for the huge support rendered by Male Airport, Maldives Tourism and relevant authorities and would like to put on record our appreciation for all the cooperation that has been given to us,” concluded Azran.

Today’s decision comes just months after the brand expanded its services to the Maldives, with regular flights between Kuala Lumpur and Malé via Colombo announced last September. The airline has said that the Sri Lankan service will continue.

Air Asia has subsequently written to all of its customers offering the re-routing or refunding of pre-booked flights that will be affected.

The Maldives tourism industry currently contributes around 30 percent of the country’s GDP, with visitors to county passing the one million mark in 2013 – growing by 17 percent compared with the previous year.

Neither the Tourism Minister Ahmed Adeeb, the President of the Maldives Association of Travel Agents and Tour Operators Mohamed Khaleel, nor the Secretary General of the Maldives Association of Tourism Industries Ahmed Nazeer were answering calls at the time of press.

The most recent government figures – from July last year – show the operational bed capacity of the industry to have been just under 24,000 in the first seven months of the year, with an occupancy rate of 80 percent.

The Maldivian Rufiyaa currently follows a pegged exchange rate with the US Dollar, with a 20 percent band on either side of a central rate of 12.85 rufiyaa to the dollar. After the managed float was introduced in 2011, the official rate quickly rose to the maximum rate of 15.42 rufiyaa to the dollar where it has remained.

Soon after the Maldivian Monetary Authority (MMA) figures showed the government had printed over MVR1 billion (US$ 64,516,129) in the past year, MMA Governor Dr Fazeel Najeed tendered his resignation.

Before departing last month, Najeeb called upon the state to reduce expenditure and to stop printing rufiyaa, which he argued was exacerbating the country’s perennial dollar shortage.

President Abdulla Yameen’s new government has looked toward the tourism industry for new sources of revenue to finance this year’s budget.

The People’s Majlis last week agreed to hike Tourism Goods and Services Tax (T-GST) from eight to 12 percent in November, approved the immediate reintroduction of the discontinued US$8 bed tax, and will now require resort lease extension payments to be made within two years.

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Tourist arrivals rose 17 percent in 2013

Tourist arrivals to the Maldives rose 17 percent in 2013 compared to the previous year, according to the latest Maldives Monetary Authority (MMA) monthly economic review.

This was mainly due to the large increase in tourist arrivals from China, coupled with a slight growth in arrivals from Europe. Reflecting this, the total bednights and occupancy rate also recorded an increase during the year,” the MMA’s review stated.

The review did note, however, that the average duration of stay declined in 2013 compared with the year before.

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 central bank also noted that real GDP (Gross Domestic Product) was expected to “accelerate to 4.5 percent in 2014, driven mainly by the tourism sector.”

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 fisheries industry – the second largest domestic industry – “the volume of fish exports increased by 48 percent while the earnings on fish exports rose by 14 percent” between January and November 2013 compared to the same period in 2012.

This was contributed by the increase in both the volume and earnings on fresh, chilled or frozen tuna,” the MMA report stated.

It added that fish purchases rose by 21 percent from January to September 2013 compared to the same period the previous year.

Inflation

The monthly review noted that the International Monetary Fund (IMF) commodity price index increased by two percent in monthly terms during December 2013.

“This increase was due to the rise in food, metal and petroleum prices in the review period. In annual terms the IMF commodity price index increased by one percent, contributed by the increase in petroleum prices which off set the price declines in food and metal.The price of crude oil increased by three percent in monthly terms during December 2013, while prices rose by six percent in annual terms,” the review stated.

The rate of inflation in the capital Malé meanwhile decreased to 3.1 percent in December 2013, the MMA revealed, which was “largely due to the fall in fish prices.”

“Similarly, the rate of inflation in Male’ decelerated  marginally in monthly terms during December 2013, which was also due to the fall in fish prices,” the review stated.

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Malé City Council urges local hotel owners to beware of bikinis

Malé City Council has urged hoteliers and guest house owners in the capital to inform tourists of the importance of dressing modestly in the country’s inhabited islands.

Responding to a letter of complaint from the Islamic Ministry, city Mayor ‘Maizan’ Ali Manik has made a public announcement calling upon patrons to be more aware of the issue.

“Please look carefully at these kind of things that happen in Malé’s streets, and Hulhumalé’s streets,” said Manik.

“People have to be careful on this, because this is an islamic country. In inhabited islands, people should not walk in bikinis.”

“The ministry has to take that kind of action. If it prolongs it may be something beyond control.”

When asked about the letter today, State Minister for Islamic Affairs Mohamed Ali denied any such message had been sent.

While the resorts islands have thrived on so-called ‘bikini and booze’ tourism for decades, Islamic Shariah is practiced among the local populace of the 100 percent Sunni Islamic country.

Despite the country’s billion dollar tourism industry being founded on high-end luxury resorts – located on individual ‘uninhabited’ islands – mid-market tourism has risen rapidly over the past five years.

The number of guest houses has grown rapidly after the rise to power of the Maldivian Democratic Party in 2008, tripling in number in the past five years – although the most recent government figures show guest houses to comprise just over 4 percent of the industry’s registered bed capacity.

While promoted as by the MDP as a way for communities and smaller businesses to tap into the country’s largest source of income, the rise in tourists staying on inhabited islands has caused concern amongst some Islamic groups who suggest tourists and locals ought to be kept apart.

“If the hippy-type of travellers come, along will come drugs and narcotics which even now our society is suffering from. Things like nudity are not acceptable in a place where people are living. The people complain that they are praying in the mosque and just outside there are tourists in bikinis,” Vice President Mauroof Hussain of the Adhaalath Party recently told the AFP.

One Malé guesthouse owner –  who wished to remain anonymous – stated that moderation should be shown by tourists when walking the streets of the capital.

“Bikinis in public I think it’s unethical considering our traditions and culture.”

The owner,went on to say that he did not feel the issue to be a serious one, however, noting that most tourists were “very disciplined”.

Mayor Manik also expressed his belief that this was not a growing problem, saying that he had received no complaints from members of the public.

The current government – having been elected on a protection of Islam platform – is planning to experiment with ‘guest islands’, which aim to utilise uninhabited islands while still giving smaller entrepreneurs the opportunity to enter into the industry.

Speaking with Minivan News last month, Tourism Minister Ahmed Adeeb said that while the current government was not against the guest house concept, he felt that publicising this small area of the industry could hurt the brand’s overall image.

“The thing is, from a marketing perspective, we have positioned the Maldives as a high-end destination. A-category guests will continue coming for as long as we market the country as an A-category destination,” he said.

Adeeb also noted that local concerns played a role in his reluctance to promote the guest house sector.

“Even locally, culturally, people get disheartened when we talk about guesthouses. So although I don’t much talk about it, guesthouse owners are aware that they have my full cooperation.”

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Parliament approves government’s revenue raising measures

Parliament today passed three bills submitted by the government to raise additional revenue anticipated in the 2014 state budget.

The revenue raising measures approved today include hiking the Tourism Goods and Services Tax (T-GST) from eight to 12 percent in November, reintroducing the discontinued US$8 bed tax starting this month, and requiring resort lease extension payments to be made within two years.

While the two amendments to the Tourism Act were voted through 38-18, the amendment to the Goods and Services Tax Act was approved 39-18. The changes will take effect once signed into law by the president.

The passage of the amendment bills was greeted with applause from government-aligned MPs.

MPs of the opposition Maldivian Democratic Party (MDP) voted against all three pieces of government-sponsored legislation, contending that the tax hikes would adversely affect the tourism industry.

“Numbers will not match”

The government had initially proposed collecting resort lease extension fees within three months, collecting bed tax throughout this year, and raising T-GST in July.

However, the parliamentary subcommittee that reviewed the legislation consulted the Maldives Association of Tourism Industry (MATI) last week and recommended revising the government’s proposals.

Representatives from MATI opposed continuation of the bed tax alongside the T-GST increase.

Appearing before the subcommittee, MATI Secretary General Ahmed Nazeer also questioned the practicality of collecting resort lease extension fees upfront.

Only 17 out of more than 100 resorts offered the opportunity by the administration of former President Mohamed Nasheed to extend leases with a lump sum payment were able to do so, Nazeer said.

Resort owners had amended their lease agreements to pay extension fees in installments during Dr Mohamed Waheed Hassan’s administration, Nazeer noted, and revising agreements for a third time could present legal challenges.

Government-aligned Jumhooree Party Leader Gasim Ibrahim – who chaired the subcommittee – meanwhile told local media following the revisions that the bed tax and T-GST hike would overlap in November, after which the former would be discontinued.

The decision was made to compensate for the loss of income from the bed tax in January, the business magnate and resort owner explained.

Finance Minister Abdulla Jihad told local media last month that the Majlis’s failure to extend the bed tax would result in a revenue shortfall of MVR100 million (US$6 million) a month.

Moreover, in the wake of the subcommittee’s revisions, Jihad warned that the projected MVR 3.4 billion (US$224 million) in additional revenue – which accounts for 18 percent of the record MVR17.95 billion budget passed for this year – could not be realised in full due to the changes.

Following remarks by Progressive Party of Maldives MP Moosa Zameer at the subcommittee last week – suggesting that pro-government MPs supported abolishing the bed tax in favour of increasing T-GST – Jihad told Minivan News that the government’s stance had not changed.

“It has not changed. And if the government does not go on with the bed tax, the numbers will not match in the budget,” he said.

Meanwhile, parliament yesterday accepted for review amendments submitted by the government to revise import duties.

In addition to raising tourism taxes and custom duties, other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

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Parliament accepts bill on revising import duties

Parliament today accepted legislation on revising import duties as part of revenue raising measures proposed with the 2014 state budget.

The amendments (Dhivehi) submitted to the Import-Export Act by MP Mohamed Rafeeq Hassan on behalf of the current administration was accepted with 40 votes in favour and 20 against. The amendment bill has been sent to a committee of the full house for further review.

The bill proposes 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.

In addition, the import duty for vehicle seat covers would be raised from 30 to 50 percent.

If passed into law, import duties for polythene bags and items that contain hydrochlorofluorocarbons (HCFCs) would be hiked to 400 percent and 200 percent respectively.

Conversely, custom duties for organic and chemical fertilisers as well as pesticides would be reduced to zero percent.

Presenting the draft legislation, the MP for Fuvahmulah North said that the main purpose of the amendments was to increase tariffs on machinery and equipment that uses HCFC gas, and to reduce tariffs on machinery and equipment that uses ozone-friendly gases.

“Similarly, import duties for some goods will be reduced to encourage poultry and environment-friendly farming,” he said.

The import duty hikes were proposed in light of the persisting dollar shortage and rising commodity prices in the world market, he added.

In the ensuing preliminary debate today, Maldivian Democratic Party (MDP) MP Abdul Ghafoor Moosa called the proposed hikes “unacceptable”.

“Taking additional taxes from the public not too long after we introduced taxes will impose a burden on citizens,” Ghafoor said.

He contended that passing the income tax bill should be a higher priority for the Majlis as the tax would only be paid by those earning above MVR30,000 (US$1,946) a month.

Import duties were last revised in November 2011 – concurrently with the introduction of the Goods and Service Tax (GST) – by the MDP government as part of its economic reform package.

Custom duties were eliminated at the time for construction material, foodstuffs, agricultural equipment, medical devices, and passenger vessels and duties were reduced for items such as furniture and kitchen utensils.

Meanwhile, a parliamentary subcommittee tasked with reviewing government-sponsored legislation – intended to raise the Tourism GST, reintroduce the discontinued US$8 bed tax, and mandate the payment of resort lease extensions as a lump sum – has today completed the review process and submitted its report to the full Majlis committee.

The report will be debated at tomorrow’s sitting of parliament, after which the amendments to the GST Act and Tourism Act would likely be put to a vote.

Other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

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 to enable the government to finance development projects.

The current extraordinary sittings of parliament during the ongoing recess are being held at the request of government-aligned MPs, who contended that the Majlis’s failure to approve the revenue raising measures was hampering the implementation of the budget.

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Chinese ambassador announces plans to build 1,500 houses in Maldives

Additional reporting by Ahmed Naish

The Chinese ambassador to the Maldives announced plans to construct 1,500 housing units during a Chinese New Year celebration in the capital Malé last night.

“We will work with the Maldivian side on how to make the best use of Chinese grant aid and the concessional loans to further benefit the economic and social development of Maldives,” said ambassador Wang Fukang.

Also in attendance at the event, Maldives Foreign Minister Dunya Maumoon expressed gratitude for the growing Chinese support in the country’s development.

“Maldives has always looked to China as an invaluable friend whose contribution to the social, cultural and economic development of the Maldives is immense. Some of the projects and some of the businesses that are currently underway are indeed very exciting,” Dunya said.

Military ties between the two countries also appear to be growing, with a Chinese naval ship arriving in Malé this morning. Rear Admiral Shen Hao of the People’s Liberation Army (PLA) expressed his hope that cooperation between the two nations would continue to strengthen.

As well providing loans equivalent to one quarter of the Maldives’ GDP to the previous administration, the Chinese government recently granted the new government of President Adbulla Yameen 50 million yuan (US$8.2 million) in development aid.

Former President Dr Mohamed Waheed was also in attendance at yesterday’s function, alongside cabinet members from the current administration.

Links between the two countries have expanded rapidly in recent years, largely as a result of the exponential growth in Chinese tourists visiting the Maldives.

Reflecting the growth in Chinese travellers worldwide over the last decade, Chinese tourist arrivals in the Maldives grew at an average rate of 48 percent between 2008-2012, becoming the industry’s biggest market in 2010.

In his speech last night, the Chinese ambassador noted that 45 percent of tourists to the country last year were Chinese, giving cause for the government to maintain close bilateral relations with the Maldives.

Defence ties have grown alongside the recent spike in tourist arrivals, with a military aid agreement being signed in December 2012.

The Chinese Navy’s hospital ship ‘Peace Ark’ arrived today on a goodwill mission, read a Defence Ministry press release, with plans to provide medical services throughout the country until July 5.

The PLA Navy’s ‘Mission Harmony 2013’ will visit Kaafu Guraidhoo, Rasdhoo, Alif Dhaal Mahibadhoo, Kulhudhuffushi, Fuvamulah, Addu City, Eydhafushi, Gaa Alif Villingili, and Senahiya Hospital in Male’.

The Defence Ministry has also revealed that the PLA will be providing home services for those with special needs in Kaafu Guraidhoo,as well as offering services at the ‘Kudakudhinge Hiya’ orphanage in Kaafu Villingili. Contact details for the service are available via the Defence Ministry website.

After becoming the only non-SAARC country to maintain a full diplomatic mission in the Maldives in 2011, China’s embassy has recently move to a larger premises and has recently started providing visa services to locals.

Following a recent state visit to India, however, President Yameen noted that regional ties would always be at the forefront of the Maldives’ foreign relations. Growing ties with China have prompted concern within India of Chinese military ambitions in the Indian Ocean region.

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Auditor General questions legitimacy of telco license fees

The Communication Authority of Maldives (CAM) did not examine annual financial statements of telecommunication companies before collecting license fees, the audit report of the former Ministry of Civil Aviation and Communication for 2009 has revealed.

The audit report (Dhivehi) made public this week noted that CAM was authorised under its agreement with telcos to check and review financial statements of the companies at any time.

However, there was no documentation showing that financial statements were scrutinised by CAM in order to calculate the license fees, the audit found.

“Therefore, we note that it cannot be verified whether the amount of money paid by telecommunication companies to the state as license fees was in truth the full amount owed by the parties,” the report stated.

Based on the findings, Auditor General Niyaz Ibrahim recommended that CAM check audited financial statements of the companies at the end of the financial year to ensure that the license fees were paid in full.

The Ministry of Civil Aviation and Communication was later renamed Ministry of Transport and Communication. In addition to CAM, the Department of Civil Aviation and the National Centre for Information Technology (NCIT) also operated under the ministry.

Among three other cases flagged in the audit report was the absence of overtime work sheets for employees at the NCIT.

While MVR106,702 (US$6,920) was spent in 2009 for overtime pay with written authorisation from senior officials, “we note that due to the lack of records at the office for employees’ overtime work (overtime work sheet) the actual overtime work and time spent could not be verified,” the report stated.

As a result, the report added, auditors could not guarantee the legitimacy of the overtime pay in 2009.

The auditor general recommended ensuring proper maintenance of records and taking action against responsible officials in line with public finance regulations.

The audit also discovered that the ministry attempted to pay a contractor MVR68,000 (US$4,410) to set up a biometric attendance system before the installation work was complete.

While the agreement was signed on December 31, 2009, to complete installation within 30 days, the audit report noted that the contractor billed the ministry on the same day, which then submitted an expense voucher to the Ministry of Finance and Treasury.

“However, we note that there were no documents at the ministry to guarantee that the work was complete before the contractor billed the ministry. Therefore, we believe that the ministry attempted to pay the contractor before the work was completed,” the report stated.

Moreover, there were no records at the ministry of estimates submitted by three interested parties, the report noted, and the evaluation committee chose the contractor with the lowest point score.

While minutes of the evaluation committee’s meetings showed that two proposals were disregarded due to lack of technical specifications, auditors found that the required technical specifications were included in one of the disqualified bids.

The auditor general recommended taking action against the official responsible for submitting the expense voucher to the Finance Ministry without confirming completion of the outsourced task.

Additionally, the audit office recommended an investigation by the Anti-Corruption Commission into the awarding of the contract by the evaluation committee.

In the third case highlighted in the report, auditors found that the ministry was not reimbursed the MVR23,927 (US$1,552) spent on a plane ticket for the minister to attend a ministerial  meeting of the Asia Pacific Telecommunity (APT) in Bali, Indonesia.

As travel and other expenses for the trip were to be covered by the APT, the auditor general recommended recovering the money.

Aside from the flagged cases of ostensible violations of public finance law, the audit report concluded that financial transactions of the ministry and the institutions operating under its remit was in compliance with the Public Finance Act and regulations under the law.

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Precious mangrove under threat as government plans airport in Kulhudhuffushi

Environmental NGO Ecocare has expressed concern that government proposals for an airport on Kulhudhuffushi island will result in the destruction of environmentally sensitive wetland areas.

“Though the constitution it self calls for sustainable development, it is sad and absurd when politicians care less about the vulnerability of Maldives and of its ecological diversity,” read an Ecocare press release.

Minister of State for Transport and Communication Mohamed Ibrahim today admitted that, should the proposed plan go ahead, there are few options but to encroach upon the island’s only remaining mangrove.

“We don’t have the details, but the new government plans to build an airport. We have prepared concept and have shared with the atoll council and the island council, and we are awaiting their comments,” said Ibrahim.

Ecocare stated that official enquiries into the specifics of the development had yet to yield any responses.

The group pointed out that – following the complete reclamation of the island’s southern mangrove for the construction of housing -the northern mangrove had been designated to be an environmentally protected zone.

Marine biologist with local environmental consultancy Seamarc, Sylvia Jagerroos, has explained the importance of such wetlands, describing them as “one of the most threatened ecosystems on earth”.

“Mangrove support the seabed meaning they prevent erosion on beachline and also enhance protection of the island in case of storm and higher sea levels,” she said.

“They support a nursery for fish and marine fauna and aid and the reef and seagrass in the food chain. The mangrove mud flats are also very important in the turnover of minerals and recycling.

Ecocare have also raised fears that the government plans to abrogate its constitutional responsibility to protect the environment as long as the proposed plans are termed ‘development’.

“Ecocare does not believe that this is a development proposal – this is just to honour a campaign pledge…it seems that he [President Abdulla Yameen] has asked authorities to get all of these promises done in 25 months,” said Ecocare’s Maeed M. Zahir.

State minister, Ibrahim, also referred to President Yameen’s August campaign pledge, in which he had suggested that the recently developed Hanimaadhoo airport – within the same area – was not enough for Kulhudhuffushi’s development.

At just just 16.6 km – or a thirty minute dhoni ride – from the new airport, Ecocare’s statement declared: “we cannot find reason whatsoever for the construction of an Airport in the Island of HDh. Kulhudhuffushi”.

Ibrahim declined to comment on the need for an additional regional airport.

Island divided

Ecocare’s Zahir suggested that most of Kulhudhuffushi’s residents were against the development, arguing that support for the proposal came largely from “party cadres” of President Yameen’s Progressive Party of Maldives.

“[Ecocare] has been made aware that there is a growing population of younger more environmentally sound locals who are opposing the idea of an airport,” Ecocare stated.

In contrast, however, Kulhudhuffushi North MP Abdul Ghafoor Moosa explained that a strong desire for economic development, alongside the government’s failure to promote the environmental case for preserving the wetlands, had resulted in strong local support for the plan.

“There are many many people who want the airport…My [parliamentary] election is a month ahead – my priority is to all people. Some of the people, they want to have the airport, so how can I comment against the airport,” said the opposition MP.

Asked about the potential for reclamation of the mangrove, Ghafoor suggested that economic imperatives would outweigh environmental.

“People are looking for the jobs and people are looking for better options,” he said. “Their concern is the airport so I am am also willing to have the airport.”

Ecocare’s Zahir suggested, however, aviation regulations make the development of a second airport in the region untenable, arguing that local development would be better served by improvements to the ferry network.

Ghafoor argued that, without significant government efforts to maintain the area, the mangroves were currently acting as breeding grounds for mosquitoes – furthering local indifference to the wetlands’ fate.

“So far, the government hasn’t brought [environmental importance] to public notice – through this muddy land, a lot of mosquitoes are coming. The government is not providing control and these things so people are suffering – when there is low tide, there is a lot of smell, due to the heat and all.”

The Maldivian Democratic Party MP suggested that a newly developed airport may only require the reclamation of 10-15 percent of the mangrove.

“Without my people surviving, how can my concern be on the environment?”

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Q&A: Minister of Fisheries and Agriculture Dr Mohamed Shainee

Following a feature article on the status of the fisheries industry – in which Minivan News spoke to local fishermen about their various concerns, an additional interview was conducted with the concerned cabinet minister about these issues.

Minister of Fisheries and Agriculture Dr Mohamed Shainee spoke to Minivan News about his political career, and the policies and plans of his ministry.

Shainee was appointed to his position on November 19, 2013 – two days after the new administration came to office. This is his first appointment to a cabinet position.

Mariyath Mohamed: With agriculture and fisheries being such a major component of our economy, what are the main achievements you seek to fulfill in this five year term as a minister overseeing these sectors?

Mohamed Shainee: I believe, as you rightly pointed out that fisheries and agriculture are a major part of the economy. But at this moment, I don’t believe it is well-represented in the economy as a vibrant sector. So, in these five years, what I would like to achieve is incorporating the fisheries and agriculture sector into the very vibrant economy of the Maldives. What I mean to say is that the fisheries and agriculture sectors should both be able to stand alone on its feet, without injecting any subsidies into them. It will be quite an achievement if I am able to do this. Five years is a very short time to change the way we’ve been doing things in these two sectors for a very long time. So I believe it will be a very good achievement if I can complete at least part of it in these five years.

MM: This being you first time serving in a cabinet, what are the main challenges you face?

MS: As a cabinet member, I don’t think there are any challenges. But the country has gone through many phases of instability and that is still present in the social fabric of the country. So I think it will be a challenge to get people’s trust built in the government, because we have passed through five years of lots of instability in the government or country. So it will be very difficult for the people to believe that the government will do something that is good and more solid for the people. So I believe that it will be a massive challenge to assure the public that we will really, sincerely do what we have promised to the public. So I guess, as a cabinet problem, there will not be a challenge.

And from what we have seen so far, I believe that the opposition is also willing to give the government, to prove whether we can or cannot do the promises in our manifesto. So I believe that we are now at a stage where we have a healthy government and a healthy opposition, which really is necessary for a country to move forward.

I don’t think there are any challenges within the cabinet, as all the cabinet ministers are well-educated and have the background, the knowledge, and the drive to pursue fulfillment of the manifesto we have put forward for the people.

MM: The government’s pledges include providing an allowance of MVR10,000 a month to fishermen during lean months. How will the government implement this and when?

MS: I have already announced that in the first quarter of this year I will reveal guidelines of how this will be done. It’s very simple: the system is an insurance scheme. If you take a look at PPM’s manifesto, you will see that the first pledge in the fisheries section is to provide fishermen with an installment or some form of payment in the lean months. And then after policy number two, we have policy number three. This is where we talk of introducing new people to the profession and increasing productivity of fisheries. There we talk about our aims and visions, one of which is that there won’t be a single perceived fisherman – I mean, when we talk about fishermen, there is skipjack fishery and yellowfin fishery, so not all fishermen – but on average, every fisherman will get about MVR 10,000 per month for their wages. This is where both of these combine together and becomes the slogan “10,000 regardless of catch”. In fact, we have already put together the forms to open up a registry for this particular scheme. We already know how many fishermen there are in this country, but for this particular insurance scheme we need to open up a new register.

It’s very simple. If you look at the skipjack fishing statistics for last year, you will see three or four months which are very difficult for the fishermen. The real goal of this is sustainability.

So the aim of the government is to ensure that even during these difficult months fishermen stay in the industry. For that reason, during those few months we want to give a payment so that they can do their basic necessities, so they can fulfill their daily obligations towards their family.

The MVR10,000 scheme is a top-up system. We actually do not want to inject subsidies into the industry. That is what I said in response to your first question – that I want the industry to work on its own in a vibrant, active manner. If we start giving subsidies, we will always remain dependent on subsidies. As you well know, subsidies are an injection of capital into an area where things have gone a little out of the ordinary. So, we needed that kind of subsidy from 2004 onwards as the catch amounts had gone down. So yes, in those days we needed a subsidy to make fishermen remain in the industry.

But it is slowly catching up. In 2013 we have seen productivity increasing. So now we need to make the industry stand alone and be more vibrant and shock-proof to absorb these shocks. We need to devise a way to get people’s minds set on the idea that they can work in the industry.

The real reason is the sustainability of the fishermen in the industry to keep them in the field during this low season. This is because what we don’t want is for fishermen to turn to other sectors in these difficult months because we need the fishing industry to run as it does now and get further developed. That is the main idea behind this.

MM: President Yameen has announced that the ministry is compiling a register of existing fishermen. According to your statistics of 2012, there were 10,264 registered fishermen at the time of the report. What is the need for a completely new register, and how much time do you estimate it will take for the completion of this register?

MS: We do have a register, but we are not sure they are inclusive of all the fishermen. This is because always a registry is maintained for a service. And we have the subsidy for which they are automatically registered, so we know exactly how many fishermen there are.

But for this specific purpose, we need to build a new registry. We need a new registry for the insurance scheme as this will be done by a second party.

We are considering for this purpose the government fund management agency NSPA, for example, to deliver this service to fishermen.

MM: Many fishermen I have interviewed have raised concerns about the decreasing price of fish. Does the ministry have any plans to address this?

MS: Yes, that is true. Every year in this time when the supply increases, the demand goes down and so prices go down. But one thing we did not say in the manifesto this time is that we will give a set price to the fishermen. But for the same reasons I said before – that we want an economically viable system to be in place – what we have said is we will give the best price to the fishermen.

And to assure that, what we have done is we have put in clauses or actions in the manifesto to make it transparent – to let fishermen know that the price they are getting is exactly the best maximum price that they can get.

So for that reason, in the first few months of the government we have made a Fisheries Promotion Board to diversify our business to various markets. Insha Allah, I have gotten four countries interested – I’m looking into the arab markets, the Russian markets, the Chinese market and the Pakistani market, who are also very interested in diversifying.

So in fact, there is a lot of work being done in all these fronts to diversify markets, because what we cannot do is to rely on one specific market – which is the European market. I mean, the European market still is the largest and the biggest and the most important market for the country. But still, if we rely on one single market, any shock to that market will be felt very badly in the country here. So we are trying to diversify, that is one action.

The other thing is in this promotion board, for the first time, we have a fisherman in the board. This is to show to other fishermen that we are working on their behalf and that the price that they are getting really is the best price they can get. On top of that, even in the ministry website, we are now publishing the yearly rates of skipjack in the market. This, as well, is for the reason that we want fishermen to know they are getting the best price. So that when they go to any buyer, they can’t fool the fishermen now.

MM: You have said there is a fisherman on the Fisheries Promotion Council itself. How was he appointed?

MS: Yes. What we are trying to advocate from the ministry is for the formation of associations or co-operatives to voice for other fishermen, or vessel owners, or other sectors – to voice out through one body.

If I listen to one individual, and go to another island and listen to another fisherman, it will be totally different. Even in the same island, there will be different views. One way of doing it is for the vehicle to make the co-operatives.

At this time, in this country we have only one running organisation, which is the Fishermen’s Association. So we requested them to give us a candidate from the fisheries who is an active fisherman to be on the board. So so far we have only one that is functioning, and that is where we selected the fisherman from.

The fisherman on the board is from Alif Dhaalu Atoll, I believe. He is a skipjack fisherman and has sat in the past three or four sittings of the board.

MM: Another concern of numerous fishermen is the rising cost of fuel and ice, which in turn raises their overhead fees and brings down the profit they earn. While you have already said that the government wants to cut down on subsidies, what other plans does the state have to assist fishermen facing this issue?

MS: Yes, of course we are increasing the number of ice plants. In fact, one of the ice plants which has been idle for a few years now will be up and running in a few months time when we [open bidding on] this plant located in Thaa [Atoll] Guraidhoo. Insha allah, this will be done in the next few months.

And the other ice plant which, again, has been idle for the past three or four months is in Haa Alif [Atoll] Ihavandhoo. This will probably be starting from January 22 onwards. There are certain areas where we can reduce the price and one of the ways is by increasing the number of ice plants. Three ice plants will come in operation, insha Allah, this year.

What it actually does is it allows the fishermen to sell the fish at a higher price.

And unfortunately – I have to say unfortunately – the culture of the fishermen is they are very passionate about what they are doing. So if one of the fishermen builds a boat, the next one wants to build a bigger and nicer boat. So that has been an issue. We have been advocating that the increasing of fishing vessels to over a certain limit is not economically feasible. And already the fishermen have realised that ‘yes, we have a 35 tonne fishing boat, but how many days in a year does a fisherman actually catch 35 tonnes of fish?’

I think people will realise in time that we cannot keep increasing the size of the vessel and that we need an economic size. And we have shown through our ministry’s research that 85 feet is a manageable and economical size.

But now the real issue is that fuel prices have gone up and it will be difficult for us to stop that. But indirectly, the government is also working to get fuel at a cheaper price. In fact, the President His Excellency Abdulla Yameen has in his last visit had some negotiations with the Indian government to get fuel at a cheaper price. We are looking at other ways to land projects in the Maldives which will help us get fuel, diesel at better prices.

I am also on this committee in the government which has already started to explore for oil in the Maldives. So, these are long term, but indirectly we are trying to bring down the consumption or price of fuel in the country.

MM: The Malé City Council has announced that fishermen will have to take a special licence to sell their catch in stalls at the fishmarket. Which institution holds the mandate for this and does the Fisheries Ministry have any involvement in this?

MS: Like yourself, I am also confused in this area. We have a sort of tug of war going on between the council and the ministry and other institutions. But recently – about two or three weeks back – the council met with the ministry asking for our help in managing the fishmarket.

The truth is that until then we did not know what was happening on the other side. But now, after the new government came into place the council met with us and we are giving colloboration to the government.

In fact, I think it is today or next week we are planning to have training for the council members so that they know what the hygiene standards should be, what the methods are… And so we have requested them to give us the plan for the fishmarket so that we can give them the technical backing and advise them on how to build a market so that it is more hygienic.

So, I think it is a collaborative effort between the council and the ministry. We have a bigger role to ascertain that the public is safe and getting the right fish, so that everything goes smoothly. On the other hand, the council has the municipal right over the market. I think we can do this hand in hand. I believe this will happen now much better as things are happening much better now than a few months before.

MM: Are you supportive of the council’s initiative to lease stalls at the fishmarket?

MS: What I heard from the council, which is the truth, is that there a lot of issues in the fishmarket. And one way of always managing is through licenses or some mechanism where you have power over whom you allow and whom you don’t allow. So that might be a good idea.

But I don’t think it should be at a rate which is difficult for the fishermen. It should be a nominal fee just for the registration. It should just be a management fee, and not for business purposes. I think the idea – I don’t know, I haven’t heard from the council – but I believe the idea is to create a managed system rather than an open system. I think it should be that way. So that it is well-managed and not just anyone can go and do unhygienic practices there.

MM: What are the main countries that fish are exported to, via the state enterprise MIFCO and otherwise? What are the challenges faced in exportation of fisheries products in recent days?

MS: The EU is by far the biggest market, especially for yellowfin tuna. But apart from that, the industry also exports to the US, as well as some to Canada, to Japan, and other markets as well. I don’t have all the details of it at the moment but the EU is the biggest market, as well as the US then. And Japan is also another market to which we export certain type and grade of fish.

On the other hand, skipjack tuna is mainly exported to Bangkok. But if they are value-added, processed, then the can again goes to Europe, so that remains our main market.

MM: The president has appealed to the British high commissioner to impress upon the EU the importance of extending GSP plus facilities to the Maldives again. What do you think the chances of this happening are?

MS: I think it can be done, because I think in the past EU and Maldives have had a good relationship as countries. So I don’t think it is impossible for this to happen. It’s just more about bilateral relations and understanding.

I mean, looking at one side, the European market or consumer will be affected from this as well. There will a lot of pressure from the consumer’s side, as when prices of fish go up, it’s not just us carrying the burden, but also the consumers. So I think there will be a lot of pressure.

I think there will be a lot of pressure because when you look at Europe, people are more educated and want these kinds of niche products.

Maldives is the only country that doesn’t catch by-catch fish. We are dolphin free. We are catching one by one. We are the most green fisheries industry in the world, in fact. So I am sure the consumers in the European market would like to get something from this side of the world which is more green and environmental friendly.

There is no reason why it can’t be done. I think as an Islamic country – a Muslim country – we have worked together well in the past. There’s no reason why we can’t.

MM: Being a low lying island state, the Maldives is vulnerable to adverse effects of climate change. What do you see as the threats of climate change to the fishing industry? Is the ministry taking any steps to counter them?

MS: I think what we have felt in the past is actually part of this changing of the climate. And for us, it would be the change in the temperature of the surface water. Because we are very environmentally friendly fishermen who catch fish from the surface waters.

If the surface water gets a bit hot, then the fish swims deeper. So we need to penetrate through that layer of the ocean to get access to the fish. That is why we have already introduced long line fishing. That is to diversify from just one way of fishing.

Again, we will be very vulnerable if we commit to just one form of fishery. It is a good sign that in terms of income, we are meeting expectations by value in yellowfin and skipjack fishery. So we already have diversified into two forms of fishing. This is one of the ideas.

Another idea or another front we are working on is mariculture and aquaculture, which also is a way to minimise the impacts on the natural fishery that we have. This is because, from what we have seen, it is more seasonal, – about a ten year cycle. But even in those times, to reduce the impact of climate related issues, we need to diversify fisheries. That is what they policy is.

MM: What are the main challenges besides environmental, faced by the fishing industry, as well as the ministry, and what are the state’s plans to deal with them?

MS: The biggest challenge is actually the budget. As you know, over the years, the government has acquired a lot of debt. And that is a challenge for the government and one of our pledges is that by the third year we will get rid of the debt.

So during these two years, it will be harder to fund any of the projects from the government’s side, so we have to find innovative ways to do so. And that we are already doing. I mean, the ministry’s plan has not decreased because we don’t have sufficient funds. But there are ways we can do this. And that’s why the government’s plan is to enable the industry to become a more vibrant industry rather than the government doing business.

So we have already given up on a lot of the businesses that we do, and we are promoting that the private partners should come and invest, and we will give them concessions so that we work in hand in hand to get what is required.

So the biggest challenge, I think, for the ministry, the government and the whole country, is the cash flow issue and the tightness of the budget.

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