Category: Business & Tourism

Maldives business news

Yameen pledges to halve president’s salary, slash wages for political appointees

Progressive Party of the Maldives (PPM) presidential candidate Abdulla Yameen has pledged to halve the presidential salary and slash the wages of political appointees by 30-50 percent, should he be elected in September.

Yameen also pledged to cut the salaries of independent institutions – which include the Human Rights Commission of the Maldives (HRCM) and the Political Integrity Commission (PIC) – a step he described as pivotal for the country to avoid a sovereign default.

The MP also vowed to work towards reducing the salary and allowances of parliament members. At the same time, he pledged to increase the wages of civil servants.

The PPM presidential candidate also emphasised the need for youth employment, promising 90,000 new jobs for young people across the Maldives by the end of his five year term.

The numbers

The Maldives has one of the highest percentages of government employees to population of any country in the world, at around 11 percent.

Salaries and allowances have also rocketed up, unmatched by government revenue. Much of this growth occurred in the two years leading up to the 2008 election and the introduction of multi-party democracy.

An internal World Bank report leaked in 2010 showed that Increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

With the introduction of the new Constitution and its requirement for an assortment of independent institutions to oversee various aspects of government, the share of the wage bill to revenue soared to “an astronomical 89 percent.”

The President of the Maldives receives a base salary of MVR100,000 (US$6500) per month. During his government’s attempts to reduce civil servant spending on the urging of the International Monetary Fund (IMF), former President Mohamed Nasheed took a voluntary pay cut of 20 percent.

Despite this, the government’s attempt to impose austerity measures was blocked by the Civil Services Commission, leading to a series of scuffles between the Finance Ministry and the CSC.

The opposition at the time, now in power following Nasheed’s controversial resignation in 2012, contested Nasheed’s expenditure on 244 political appointees – a figure partly the result of the government’s early efforts to consolidate state employees under government-owned companies outside the purview of the CSC.

Figures released by the Ministry of Finance and Treasury showed that these 244 appointees were being paid MVR 99 million (US$6.4 million) a year, however Nasheed’s administration contested that this constituted just two percent of the state’s 2011 wage bill, comparing it to the 39 percent that went to the civil service, 24 percent to uniformed bodies, 17 percent to local councils, 10 percent to independent institutions, 5 percent to the judiciary, and 2 percent to parliament.

In comparison, President Waheed’s government during 2012 spent MVR 60 million (US$3.9 million) on 136 appointees, according to figures procured by Sun Online.

At the time, the monthly spend included 19 Minister-level posts at MVR 57,500 (US$3730), 42 State Ministers (MVR 40,000-45,000, US$2600-2900), 58 Deputy Ministers (MVR 35,000, US$2250), five Deputy Under-Secretaries (MVR 30,000, US$1950) and 10 advisors to ministers (MVR 25,000, US$1620).

Overall public expenditure in 2012 increased 12 percent on the previous year.  This was in large part due to measures such as the intensified recruitment and promotion of a third of the police force, and repayment of civil servant salaries cut during the Nasheed era.

The Maldives Monetary Authority (MMA) noted that while total expenditure for the year was three percent lower than 2011, this was only due to the government’s failure to pay a large number of bills. Total public debt at the end of 2012 was 72 percent on GDP, the MMA stated.

Meanwhile, the government’s wage bill was in May projected to increase by 37 percent in 2013 as a result of hiring more employees, notably 864 new staff for the police and military – an increase of almost 20 percent.

In its professional opinion on the budget submitted to parliament, the Auditor General’s Office also observed that compared to 2012, the number of state employees was set to rise from 32,868 to 40,333 – resulting in MVR 1.3 billion (US$84.3 million) of additional expenditure in 2013.

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Gasim in “better position” than Yameen for election victory, JP claims

The Jumhoree Party (JP), led by business tycoon and MP Gasim Ibrahim, has this week expressed confidence it will finish above the Progressive Party of Maldives (PPM) in the first round of the upcoming presidential election – before securing a second round victory.

Speaking following the launch of the JP’s election manifesto, the party’s Policy Secretary Mohamed Ajmal said indicators like internal policy research had reaffirmed its supporters’ belief that MP Gasim was in a “better position” than PPM candidate Abdulla Yameen to secure the presidency.

The comments were made following the launch of the JP’s election manifesto, which places an emphasis on pre-school and university education, as well as introducing a so-called “holistic” taxation policy extending to individuals and businesses.

The PPM, formed by former autocratic President Maumoon Abdul Gayoom, has meanwhile maintained that MP Yameen and former President Mohamed Nasheed of the Maldivian Democratic Party (MDP), remain the only two candidates capable of winning the election – accusing Gasim of having to buy support in order to compete with them.

‘Jumhoree coalition’

Despite the claims, the JP has been working to consolidate its support base ahead of September’s poll, with the religious conservative Adhaalath Party (AP) and the Dhivehi Qaumee Party (DQP) last month leaving a coalition with President Dr Mohamed Waheed’s Gaumee Ithihaad Party (GIP) to instead back Gasim.

With voting expected to commence a month today, MP Gasim has claimed in local media that the JP had over 30,000 members when including applications waiting to be approved by the country’s Election Commission (EC).

JP Policy Secretary Ajmal said the membership numbers were reflective of campaign visits to islands across the country in recent months, which highlighted that Gasim was seen as a “man of the people” ahead of the election.

He added that the addition of other high-profile politicians like one time PPM Deputy Leader Umar Naseer to the JP further highlighted the growing support for Gasim’s candidacy.

Alongside this support, Ajmal said he remained confident that the focus of the JP manifesto on issues such as tax reform would directly address key voter concerns about the current state of the economy.

Among these proposed reforms is a “holistic” approach to tax that would extend taxation beyond the Tourism Goods and Services Tax (T-GST) and general GST introduced and expanded under the former government to include capital gains tax and income tax.

“With taxation, we hope to take a holistic approach to the bare minimum policy of tax we have with T-GST and GST,” Ajmal said.

He added that a JP government would also work to comply with International Monetary Funds (IMF) recommendations to balance the nation’s budget deficit. The IMF earlier this year expressed concern that without raising revenue and cutting expenditures, the Maldives risked exhausting its international reserves and sparking an economic crisis.

Ajmal said that while there were many ways to try and curb the budget deficit, the JP would favour what he called a “optimistic approach”.

“There is not a problem with raising revenue in the Maldives, the problem is in fact related to a lack of infrastructure,” he said. “The wealthy are not being taxed properly and there is an issue with the distribution of wealth in the nation.”

Ajmal claimed that with an estimated 60 to 70 percent of national income now being spent by the government on recurrent expenditure, the JP in government would look to curb the amount of borrowing undertaken by the state.

He claimed one solution would be reducing the state’s reliance on treasury bills by securing “low interest” development loans to try and reduce outgoing payments on national borrowing.  The spokesperson was not drawn on whether cuts would need to be made to the country’s civil service.

The JP meanwhile pledged that it would not be increasing the size of the country’s civil service as part of aims to curb recurrent expenditure to about 40 percent, focusing instead on investment in local infrastructure to try and raise revenue through the private sector.

With the JP presently serving within the coalition government of President Waheed following the controversial transfer of power in February 2012, Ajmal said he believed voters saw Gasim as an “individual” candidate, and not someone who would continue the economic policies of the present administration.

“Mr Gasim has always supported all governments, apart from the previous administration when he was betrayed by [former President] Mohamed Nasheed. We as a party are always concerned for the people,” he said. “We believe that voters don’t see us as part of the current government.”

Ajmal said that the party believed Gasim was an individual who voters would understand did not have the powers alone to affect the financial policy of the present government.

“Mr Gasim has supplied some US$10 million to US$12 million though the Villa Foundation on philanthropic matters,” he said.

Ajmal claimed that the ‘Jumhoree coalition’ backing Gasim election had now allowed the JP to position themselves as the “main alternative” to former President Nasheed for all voters wishing to oppose him.

JP coalition “no threat”: PPM

Ajmal’s claims were rejected by PPM MP Ahmed Nihan, who today dismissed any notion that the coalition backing Gasim’s presidency could pose a threat to his own party’s election campaign.

He added that the PPM was certain the presidency would be won by either its own candidate in Yameen or former President Nasheed.

Addressing the members of the ‘Jumhoree coalition’ backing Gasim, Nihan accused the religious conservative Adhalaath Party in particular of having “disintegrated” and no longer resembling the political party it was formed as in 2005.

“In 2005, soon after the election, [the AP] has huge support , but soon after they sold their beliefs to many parties including the MDP,” he alleged.

“Maybe tomorrow they will come knocking on our door,” Nihan added of the party.

As a further contrast to the JP, Nihan argued that only the PPM and MDP had supporters and activists working across islands all over the country that were fully “engaged” in election campaigning and making banners, sometimes at their own expense.

He claimed that during the party’s recent campaign tours, the PPM had not seen any similar support for Gasim, the JP or his coalition.

“[The JP] does not have campaigners all over the country. Gasim has had to pay people to work for him, where as we do not have to pay for support,” Nihan said.

Flying the flag

Taking the example of his own constituency in Vilimale’, Nihan claimed that Gasim had brought supporters across from the southerly Addu Atoll to come and put up banners “bought from China”, 60 percent of which he alleged had been put up across the one island.

The flags are said to have been set up in such significant quantities that one Vilimale’ resident told Minivan News: “On some roads, I can’t see the sky.”

Similar displays of flags and party colours have in recent months begun appearing across the capital of Male’, even resulting in a so-called ‘paint war’ between rival PPM and MDP supporters in June.

However, Nihan claimed that majority of flags and banners produced by the PPM had been handmade by local supporters, reflecting what he said highlighted the overriding popularity of the party in Maldivian politics.

“On [Vilimale’] we don’t see the support for Gasim, but the flags are certainly there,” he said.

Nihan agreed that Gasim did have “loyal” support in parts of the country, but said it would not be enough to challenge for a top two place during national polls.

“I express my gratitude to Gasim as a philanthropist, but his coalition partners will not provide the level of support we have,” he said. “He is spending millions on his campaign.”

Nihan was also critical of the JP’s proposed reforms to taxation, arguing that Gasim as both a parliamentarian and party leader had not previously advocated for increased taxation.

He accepted that before the foundation of the PPM, the majority of the party’s MPs – then belonging to the Dhivehi Rayithunge Party (DRP) before a bitter split – had ultimately supported the introduction of taxation despite initial reservations.

Nihan said that the party’s initial reservations were based on the timing of introducing such taxation starting from 2011, adding that PPM candidate Yameen did support the introduction of tax despite wishing the matter had been handled differently.

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Maldives government terminates Nexbis agreement, gives 14 days to vacate

The Maldives government has terminated its agreement with Malaysian security firm Nexbis to install and operate a border control system, giving it 14 days to vacate.

Defence Minister Mohamed Nazim local media that the disputed contract – signed under the previous government of former President Mohamed Nasheed in 2010 – was terminated by the cabinet yesterday over fears it was causing unspecified “major losses” to the state.

The termination was announced as immigration officials today said replacement technology being provided by the US government was not presently functional, with implementation “on hold” pending a legal hearing into the matter.

Department of Immigration Spokesperson Ibrahim Ashraf told Minivan News this morning that he had not personally been made aware of any decision by the government to terminate the agreement.

However, Ashraf confirmed that replacement technology being provided free of charge by the US government was “not 100 percent functional” at present.

“Because of legal issues, the project has been on hold,” he explained.

Immigration officials last month confirmed that “testing” had been underway on the new US-donated system, while Nexbis’ border control technology remained in use to monitor the arrivals and departures of foreign nationals

Ashraf referred further questions on the Nexbis system to Immigration Controller Dr Mohamed Ali, who was not responding to calls at time of press.

Nexbis is the second high profile foreign investment to be suddenly evicted by the administration of President Dr Mohamed Waheed in the past 12 months.

The government last November announced it was terminating a 25-year concession agreement with India-based GMR to construct and operate a new terminal at Ibrahim Nasir International Airport (INIA) in Male, giving the company seven days to vacate the country.

GMR is currently seeking compensation totaling US$1.4 billion from the government as part of arbitration proceedings to be heard in a Singaporean court, damages eclipsing the annual state budget.

Speaking to local media today, Defence Minister Mohamed Nazim was quoted as saying that the government expected to assume control of the country’s borders at the end of the 14 day notice period given to Nexbis.

He claimed that the US system was also “ready to be operational”, although no decision had yet been made to use the technology.

Attorney General (AG) Azima Shukoor added that discussions were presently being held with Nexbis over reaching an out of court settlement for terminating the contract, although she declined to provide any more details to media today.

“We assure you that the burden on the state will be far less with the termination of the agreement rather than continuing with it. We will take this process forward in the best interest of the state,” she was quoted as saying by Haveeru.

Concession agreement

Under the concession agreement signed with the Maldives government, Nexbis levied a fee of US$2 from passengers in exchange for installing, maintaining and upgrading the country’s immigration system.  The company also agreed a fee of US$15 for every work permit card issued under the system.

Both AG Azima and Defence Minister Nazim were not responding to calls at time of press.

Nexbis last month invoiced the Department of Immigration and Emigration for US$2.8 million (MVR 43 million) for the installation and operation of its border control technology in line with a concession agreement signed in 2010 – requesting payment be settled within 30 days.

Nexbis’ lawyers argued that the company had expected the fee to be included in the taxes and surcharges applied to airline tickets in and out of the country, according to local media.  However, lawyers argued these payments had not been made due to the government’s “neglect” in notifying the relevant international authorities.

Minivan News was awaiting a response from Suood, Anwar & Co – the company’s legal representatives in the Maldives – at time of press.

Parliamentary vote

Parliament had voted unanimously to terminate the agreement on 25 December 2012, in line with a recommendation from the Finance Committee alleging foul play in the signing of the agreement with former Immigration Controller Illyas Hussain Ibrahim.

Presenting the Finance Committee report to the floor, Chair MP Ahmed Nazim explained at the time that the “main problem” flagged by the Anti-Corruption Commission (ACC) was that the tender had not been made in accordance with the documents by the National Planning Council authorising the project.

The Finance Committee also recommended terminating the agreement over concerns it contained clauses to waive taxes to the company, Nazim said.

He noted that imposing or waiving taxes was a prerogative of parliament under article 97(d) of the constitution.

Following parliament’s termination of the project in December, Nexbis sought a legal injunction to prevent any cancellation of the agreement while court hearings over the contract were still ongoing.

The company had sought to contest whether the ACC has the power to compulsorily request the government to cease all work in relation to the border control system agreement.

However, in April of this year, the High Court overturned a Civil Court ruling declaring the ACC could not terminate a border control system (BSC) agreement signed by the Department of Immigration with Malaysian mobile security firm Nexbis.

The High Court ruling (Dhivehi) cleared the way for the Civil Court to hear the case filed by the ACC should it be resubmitted.

Nexbis has emphatically denied allegations of corruption, previously speculating that “criminal elements supporting human trafficking” were seeking to sabotage the agreement.

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State reserves rise to US344.4 million: MMA

State reserves increased to US$344.4 million in July, according to the Maldives Monetary Authority (MMA), a figure worth approximately 2.7 months of imports.

The data was published in the MMA’s monthly economic review for July.

Total government revenue for the first six months of the year, excluding grants, was MVR 5.4 billion (US$350 million) while total expenditure (excluding net lending) was MVR 6.8 billion (US$440 million).

While the 2013 budget projected a decline in the budget deficit to 4 percent of GDP from 13 percent in 2012, the MMA noted that according to balance of payments estimates for 2013, the current account deficit was estimated to increase to US$690.7 million, equivalent to 28 per cent of GDP.

“Of this deficit, 62 per cent is to be financed through foreign financing while 38 per cent is to be financed through the sale of T-bills and other means,” the MMA noted.

Outstanding T-bills had meanwhile increased from MVR 5.5 billion (US$356.6 million) in November 2012, to MVR 9 billion (US$583.6 million) as of May 2013.

Total tourist arrivals meanwhile increased 18 percent on the first half of 2012, largely driven by Chinese arrivals, while the average duration of stay declined 12 percent.

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Belgian group “conditionally awarded” Hulhumale’ second phase reclamation contract

The Housing Development Corporation (HDC) said it has “conditionally awarded” a contract to Belgium-based company Dredging International to undertake the second phase of reclamation work on the island of Hulhumale’.

HDC Deputy Managing Director Mohamed Shahid today told Minivan News that financing on the contract was still in the process of being finalised at present on the project, with the bid price “more or less” anticipated to be about US$59 million.

Shahid added that a total cost of the project could not be given until certain technical requirements related to the expansion project were finalised.

Local media has previously reported that the HDC project to reclaim 230 hectares of land on Hulhumale’ suitable for residential use would cost an estimated US$60 million, with six foreign parties reportedly expressing interest earlier this year. The development is anticipated to be the largest project of its kind in the Maldives.

Shahid said that with most of the housing planned for the first stage of the development on Hulhumale’ now complete, a second stage would begin soon to reclaim land for the further development of residential and commercial properties that would be managed by the HDC.

A source with knowledge of the project today confirmed that representatives for Dredging International were expected to arrive in the country in the next two to three weeks to begin inspections of the project area before work could commence.

Local newspaper Haveeru meanwhile reported that the second reclamation phase was expected to take about one and a half years to complete.  The work will include reclaiming land presently used for the Club Faru resort, an island property sharing the Hulhumale lagoon closed earlier this year in anticipation of the project.

The Maldives government earlier this month announced it was nearing an agreement to move ahead with the second phase of reclamation work, despite claiming weeks earlier that the project could face continued delays due to limited financing.

The claims were made as the government also this month entered into discussions with Saudi Arabia over securing a US$300 million credit facility for several purposes including “budget support”.

Despite the state’s financial concerns, President’s Office Media Secretary Masood Imad said the agreement would see work commence on a second phase of land reclamation in Hulhumale’ “as soon as possible”.

The development of Hulhumale’ near Male as a residential area was originally intended to reduce congestion in Male – one of the most crowded cities in the world, with an estimated 55,000-60,000 people per square kilometre.

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Atoll Paradise attributes troubles to “lengthy delay in securing bank finance”

Tour operator Atoll Paradise has issued a statement “apologising unreservedly for any frustration caused to any of its customers due to recent cancellations.”

Atoll Paradise is one of the Maldives’ largest local tour operators. However, the Tourism Ministry last week suspended its permit amid allegations it had defrauded customers and international travel agents.

Tourism Ministry Senior Legal Officer Faseeh Zahir told Minivan News the government had have received several complaints in recent months that bookings had been cancelled by the company without being refunded.

“There are allegations of fraud and of the company not acting according to regulations. This is not just a case of one guest, we have received several complaints,” said Zahir. The company has also been fined MVR 1 million (US$65,000).

In its statement, Atoll Paradise said it “wished to make it clear that it is a reputable business organisation and the recent unfortunate developments stemmed from a lengthy delay in securing bank finance to sustain its business operations.”

Cancellations were “unavoidable”, the company said, while “strenuously emphasising” that no employee of the company “ has ever engaged in fraudulent activities towards any external parties.”

The company acknowledged it had encountered “some cash flow difficulties” in 2013, stemming from an “unexpected delay in a bank loan facility.”

“This delay is not to be blamed on anyone (neither person nor corporation), as financial proceedings can sometimes encounter unexpected obstacles and include complexities and lengthy legal clearance procedures beyond the initially expected scope,” the company contended.

“Although the management had explored all available options and done its best to avoid having to cancel any bookings, such cancellations could not be avoided anymore, if Atoll Paradise did not want to further disappoint its customers by leaving them stranded at the airport after their arrival in the Maldives,” the statement read.

“These actions, although difficult to make, were taken in accordance with the Booking Policy of the company, and all customers will be refunded with minimum delay,” the company promised.

Atoll Paradise said it was working with the Ministry of Tourism on “resolving these unfortunate issues so that all pending refunds can be processed without any further delay and normal business operations of the company can commence as soon as possible. It is important to note here that several refunds have already been processed prior to this decision by the Ministry. All customers are informed periodically on the status of their refund.”

Disgruntled customers waiting on refunds

Several of the company’s customers meanwhile contacted Minivan News following publication of last week’s article, with details of their grievances and extensive documentation and correspondence with the company.

The Barras couple initially booked their 14 night, US$24,698 holiday at Dusit Thani resort through Atoll Paradise in July 2012 for mid-February 2013. However three weeks before travelling the couple were forced to cancel their booking for medical reasons, and were promised a refund of US$23,113, including a US$350 ‘admin fee’ and five percent ‘bank charge’ on January 24, as a “one time exception”.

In a long series of successive emails, assorted company staff repeatedly apologised and promised repayment in several days, providing reasons including “It will take 1 to 2 billing cycles for the amount to be posted back to your account”, “I can only file for the refund request by Monday due to bank holidays here until Sunday”, and “we are moving all of our principal banking from three different banks to just one which is Mauritius Commercial bank.”

Several staff members informed the couple that Atoll Paradise had already paid the resort in advance, and was waiting for a refund.

The couple contacted the resort’s management directly, only to discover that the resort had never received payment from Atoll Paradise, and had cancelled the booking immediately on first request.

“The money you paid [to Atoll Paradise was not remitted to us, nor was there any communication regarding a refund since no monetary transaction had transpired between Dusit Thani Maldives and Atoll Paradise for this particular booking,” wrote Dusit Thani’s General Manager Desmond Hatton to the couple on April 9, 2013.

After waiting three months for the refund, the couple began to add their concerns about the company to others on Tripadvisor.

“Your case has been raised this with our Executive Management team, to try and get a better understanding as to when we can rectify this internal issue, as you know this has been pending a while and as such we are not delivering the exceptional service we are known for, this is very disappointing and I can assure you this matter is not being taken lightly,” the couple were informed in April by a staff member called ‘Laura’.

The Barras were then contacted by Atoll Paradise’s Director of Business Development, Chloe Esme Bagir, who informed them that “due to the extent of your unruly comments on the internet, it is now being dealt by our Legal and Accounts Department and will be reviewed in strict adherence to our published Booking & Cancellation Policy. We will reply to you once we get their decision.”

At the time of their contacting Minivan News, the couple were still awaiting payment of their refund.

“Since we didn’t go, the hotel didn’t get paid … so [Atoll Paradise] decided to keep the money for themselves. What kind of company does this?” asked Tristan Barras.

In an email to Minivan News, Atoll Paradise advised that Barras “cancelled shortly before arrival and thus lost 100 percent of the amount paid, in accordance with Atoll Paradise Booking Policy.”

Booking cancelled four days before flight: “I appreciate this will have come as somewhat of a shock”

In another case, Nitchima Chia from Thailand booked a two bedroom pool villa at Centara for six people on March 6-10 through Atoll Paradise, paying US$6,235 upfront via credit card.

Four days before the group was due to depart, having already paid US$3450 for flights from Bangkok to the Maldives, Chia was informed by Atoll Paradise that due to “unavoidable circumstances arising within our operations” their booking, among others falling between May 1-16, had been cancelled.

The company gave Chia the option to refund the full booking value, or reschedule the booking after July 1.

Noting that the group had days left to get on the plane and that the flights were non-refundable, Chia urged Atoll Paradise to move them to another hotel, or refund the full expenses of the trip: “July is impossible as the kids need to go to school during this time,” she said.

Atoll Paradise replied: “I appreciate this will have come as somewhat of a shock, however we are unable to honor any bookings within this period.”

“Atoll Paradise is in the process of relocating to a newly built office compound. This is a project we have been working on for the past 12 months to expand and grow our business. Due to this we are having difficulty in managing some our arrivals for this period efficiently,” the company wrote.

“Your booking with Atoll Paradise is cancelled and will not be reinstated.”

In another email, Atoll Paradise advised that “as only the accommodation is confirmed with us, we cannot hold any responsibility for the flights”, and urged Chia to contact her travel insurance provider.

Chia was initially promised a refund within four weeks with a “cut-off period” of eight weeks. However, on June 6 she was informed that the “refunds are taking a further delay due to lack of funding. We are confident we should receive these funds within the month of July. Please give us a little more time to settle this.”

On July 5, the company informed Chia that it understood this delay in your refund “is causing a lot of frustration for you”, and assured her that “the delay in your refund is not intentional.”

“The entire management team are working tirelessly to expedite the refund process for all our clients. Our bank has already agreed a facility for us, agreement already approved and signed. Due to lengthy legal documentation, the funds from our bank have taken longer than initially anticipated hence these delays. We anticipate the refund will be in your account end of this month and latest first week of August.”

Chia subsequently contacted the Royal Thai Consulate in Male.

Some customers, speaking about their experiences with the company on a 28-page Tripadvisor thread, reported success in securing chargeback payments direct with their credit card companies.

Police Chief Inspector Hassan Haneef meanwhile last week confirmed police had begun investigating the company over fraud allegations.

The Tourism Ministry has said Atoll Paradise’s permit will remain revoked until all alleged outstanding payments and grievances have been settled.

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Five hospitalised after fire destroys 16 water villas at Adaaran Select Hudhuranfushi resort

Five people have been hospitalised with minor injuries after a fire destroyed 16 water villas at the Adaaran Select Hudhuranfushi resort in North Male’ atoll this morning, local authorities have confirmed.

A police media official confirmed one Brazilian and three Chinese tourists had been taken to Male’ for treatment for injuries sustained during the resort blaze.  One Maldivian member of staff was taken to hospital on the island of Thulusdhoo, police said.

The media official confirmed that a special police investigation team including forensic officers were today assessing damage at the resort, though no further details were given on the possible cause of the blaze at time of press.

Maldives National Defence Force (MNDF) Spokesperson Major Hussain Ali said fire fighters were informed of the blaze at 4:40am today.

Major Hussain said the fire was brought under control a few hours later at 6:50am, with the MNDF expected to provide technical assistance to police officers investigating the blaze. He said a total of 17 rooms were severely damaged.

Resort open

Mohamed Mahdy, General Manager of Administration for Adaaran, said the Hudhuranfushi Select resort remained open to guests, with its beach villas and other properties unaffected by the fire.

The spokesperson added that an investigation into the incident was already underway for insurance purposes.

Upon discovery of the fire, Mahdy said staff realised they did not have the capacity to deal with the blaze and called in MNDF firefighters.

Subsequent to publication, Mahdy clarified that the resort had three water pumps on site, and that staff had brought the fire under control as MNDF firefighters arrived.

He added that the design of the water villas, particularly roofs covered in thatched material, had meant the fire spread quickly, but efforts were still successful in preventing further spread to other areas on the resort.

Promotional image of resort's water villas

Fire safety

Mahdy said the company continued to operate its properties in full compliance with local regulations and would not be reviewing fire safety on the site.

Mahdy confirmed that resort’s water villas were not fitted with smoke alarms, explaining that the properties were “very different to city hotels”.

However, he said staff had woken up and evacuated all guests once the fire was discovered.

He said Adaaran had contracted local authorities to undertake fire safety training with staff at the resort.

Water villas – stilted structures that sit above the sea – have become synonymous with high-end resort properties in the Maldives and are offered as premium category accommodation by both local and multi-national hospitality groups in the country.

Adaaran Select Hudhuranfushi is the second of the country’s more than 100 exclusive island resort properties to have experienced a fire over the last three days, with local media reporting that five people had been hospitalised with minor injuries following a blaze at the Robinson Club resort in Gaafu Alifu Atoll.

Sun Online reported Friday (July 19) that three Maldivians and two foreigners were injured by an explosion that occurred in a staff store area on the property.

Four of those injured by the fire were reportedly admitted to hospital with burns on different parts of their body.

MNDF officials meanwhile speculated that the fire was likely the result of an electrical malfunction, according to Sun.

Tourism Minister Ahmed Adheeb could not be reached for comment at time of press.

Clarification: General Manager of Administration for the Adaaran resort, Mohamed Mahdy, subsequent to publication of this article informed Minivan News that the resort had three water pumps on site, and that staff had brought the fire under control as MNDF firefighters arrived.

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Comment: The unfortunate reality of an island airport

Milton Friedman, one of the most influential economists of 20th century, once said “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand”.

While it has been proved time and again that Governments have no business being in business, the issue is still widely debated and will probably linger on in eternity. However, in the Maldives, this issue of state ownership of businesses takes a totally different dimension. When Mr Friedman made this, now legendary, comment he referred to only the inefficiencies in decision making and economic management that most governments and politicians are riddled with. In the Maldivian context, one has to take into account the mala fide intent as well as narrow self-interests of people in the government as well.

An unfortunate example of how the Government of the day not only destroys value but systematically works against the interest of the people is our prized national asset – Ibrahim Nasir International Airport.

Caught in the middle of political wriggling and costly lawsuits, politicisation of the airport by everyone across the political spectrum and the mullahs typifies all that is wrong with our economy, our businesses and our government.

Ever since the ousting of GMR, whatever progress that had been made at the airport is now being undone – reversal of employees benefits such as employee insurance which was given by GMR to stalling of development works at the airport are just a few examples.

I have been told of way too many stories of flight delays due to systems outages, long unmanageable queues and leaking roofs to be convinced all over again of the Government’s inefficiencies in managing enterprises.

But I do not intend to focus on Government’s inefficiency in managing our national airport in this article. I would rather highlight the systematic manner in which the current Government seems to have taken control of the airport to serves its and its cronies’ own narrow self-interests rather than let it be run in a professional manner that is best for the passengers as well as the nation.

First, Dr Waheed’s government wanted to create a new airport company (MIAL) to take over management of Ibrahim Nasir International Airport with a new MD and a new Board of Directors with the intent of setting up tight control on the airport management. When the AG advised them of legal impossibilities related to this action, he appointed the same set of cronies to the MACL board to ensure he controls the board and all important commercial decisions at the airport.

Of course, at the time of cancelling the agreement, Government did say that new and professional management will be brought to manage the airport within 3 months and there will be no political influence in managing it going forward. Whatever happened to Dr Waheed’s ideas of ‘professional management’, Dr Hassan Saeed’s idea of ‘internationally experienced  foreign CEO and CFO’ and Sheikh Imran’s ‘national consultations for deciding the future of the airport’.

On political appointees and lack of professional management, it is interesting to note that Dr. Waheed’s political appointee as the MD of MACL– Bandhu Saleem has at least started making some noises around what are all the challenges that are facing the airport – lack of funds, no master plan and hardships & sacrifices for 3-4 years in each phase of airport’s development. He said these things in an interview to a local daily and what is most painful is that whatever he said only highlights the stupidity of the decision to oust GMR.

If it was that easy for a government company to get US$350 million funding for the airport, then why would anyone anywhere across the world privatise airports in the first place?

And by that logic, even Dr Waheed would have got his US$500 million loans from China and US$350 million grant from Saudi Arabia for budgetary support by now surely? As for the master plan for development, it was to be announced within 3 months of GMR’s ouster and we haven’t heard a word from anyone on this yet. There are bigger battles for all the politicians to fight, within themselves, in two months.

It’s clear by now that all these lofty promises always sound good to the general public and Bandhu Saleem’s game plan seems to be the same for now, even though reality it is most important to first take care of the basics. I have been told by sources that in one of the first meetings that he called after moving to his office at the airport, his authority was challenged and thwarted directly by the attendees. He intended to undertake frivolous discussions on the “Vision & Mission” for the airport when all the other attendees didn’t even have permanent contracts or medical insurance covers, something that they enjoyed under GMR management.

While airport’s development by MACL is an elusive dream that may never see the light of day, the fear really is that since it is back under MACL (effectively government) control, systematic corruption will rise like never before. What is most interesting for us to note is that all of these moves to take control of the airport operations come at a time when the Presidential elections race is heating up by the day.

Campaign funding is the need of the hour and we know that most elections are won or lost on the level of funding that is available to a candidate. With his allies deserting him thick and fast, what may still keep Dr Waheed in the hunt for the election is the money that his cronies are willing to bet on him while he is still in power.

It is well known that the likes of MVK Shafeeg and Najah have their eyes set on more airport concessions. MVK Shafeeg has been funding most of the anti-GMR protests and has been providing campaign funding aggressively to Dr. Waheed’s coalition.

So, I’ll not be surprised if we see MVK shops coming up in duty free section of the airport soon. A refurbished and world class duty free offering was one of the best things that GMR had done at the airport. MACL’s previous MD Mafooz had publicly stated that duty free is one of the best profit earners for the airport. It will only be in return for securing his campaign funding that Dr. Waheed’s government will allow MVK to get duty free shops at the airport for peanuts.

After all, securing massive amount of funds may be half the battle won in the presidential race of September 2013.  Whatever happens to the airport and its development after that can be put on the backburner like it had been for each of the last 25 years – except for the two when GMR managed it!

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