Business & Tourism – Page 35 – Minivan News

Tata reaffirms commitment to stalled Maldives housing projects

Indian-based corporate giant Tata has said it has no intention of offloading its stake in a Maldivian joint venture overseeing several housing projects in Male’, despite local media speculation that land set aside for the company had been sold off.

Tata this week confirmed to Minivan News that it remained invested in Apex Realty PVT Ltd, a Maldives joint venture established under the previous government between itself and developers SG18.

Tata Housing Development Spokesperson Vikram Kharvi added that the company was not considering selling its stake in the project, despite construction work having stalled on several commercial residential projects it was developing through the joint venture.

Kharvi confirmed that negotiations were ongoing with the government at present to resolve certain issues concerning the stalled developments on land provided to the company under its joint venture agreement.

He declined to clarify the exact nature of issues that had stalled the projects at time of press, forwarding specific questions on the matter to Sandeep Ahuja, Tata Housing Development’s Senior Vice President .

Minivan News was awaiting response from Ahuja at time of press.

Deputy Minister of Housing Abdulla Mutthalib confirmed to local media this week that the projects being overseen by Apex Realty had stalled due to what he said were a shortage of funds and construction materials.

Mutthalib expressed hope that the stalled projects could still be completed by year end.

“There are some constraints as they are also using subcontractors. The earlier deadlines given by the government have passed. Shortage of funds and construction material have brought both the projects to a complete standstill,” he was quoted as saying by Haveeru.

Local media also noted speculation that plots of land originally promised to Tata for its residential projects had since been purchased by local developers.

Contacted by Minivan News, Mutthalib declined to comment, adding that only Housing Minister Dr Mohamed Muiz was able to provide information to the press.

Dr Muiz was not responding to calls at time of press.

“Political interference”

In November last year, Tata was among a number of Indian companies reported to have expressed concerns over political interference threatening their investments.

Officials involved in the Apex Realty housing development project told Indian media in November 2012 that the government was attempting to take over a site in Male’ given to the company, with the intention of building a new Supreme Court.

The current Supreme Court building was formerly the palace of former president Maumoon Abdul Gayoom, but became the court under his successor Mohamed Nasheed, who opted for the less ostentatious official residence of Muleaage.

A source involved in the Tata deal confirmed to Minivan News that the government had offered land on the island of Hulhumale’ to Tata as an alternative to the agreed site in Male’. However, the same source said the developers felt the change would affect the financing of the project.

The claims were made just weeks before the present government declared a concession agreement signed with infrastructure group GMR to manage and develop Ibrahim Nasir International Airport (INIA) “void” – terminating outright the country’s single largest foreign investment project. GMR were then given seven days to leave the country.

Tata, one of India’s most powerful corporate entities, announced its entry into the Maldives housing sector in 2011 as part of a multi-million dollar cooperation agreement with the administration of former President Mohamed Nasheed to build residential and resort properties.

The Wall Street Journal newspaper reported at the time that the Maldives government-commissioned programme, valued at an estimated US$190 million, required Tata to develop around 350 residential flats and a number of island villa properties that would be sold both to the state and on the open market.

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Bank of Maldives reportedly resolves US$58 million debt chase out of court

The Supreme Court has dismissed an appeal filed by two companies linked to Dhivehi Rayyithunge Party (DRP) Leader and President Mohamed Waheed’s vice presidential candidate Ahmed Thasmeen Ali concerning unpaid debts to the Bank of Maldives (BML), after an out-of-court settlement was reportedly reached by both parties.

Lawyers representing Mahandhoo Investments and Kabalifaru Investments – companies with ties to Thasmeen – told presiding Supreme Justice Ali Hameed that they had negotiated a settlement with BML over US$58 million owed to the bank, according to local media.

Mahandhoo and Kabalifaru had appealed a High Court verdict upholding a Civil Court ruling – issued three years and eight months ago – ordering the companies to settle the debt.

BML lawyers confirmed to the court that such an agreement had been reached and that they had no objection to the Supreme Court dismissing the case, private broadcaster VTV reported.

Thasmeen and the Department of Judicial Administration were not responding to calls at time of press.

Minivan News is also awaiting a response from BML, with the bank’s public relations manager Hussain Rasheed claiming he had not received official confirmation that a settlement had been reached in the case at time of press.

Today’s case was heard a day after Ahmed Faiz, a council member of President Waheed’s Gaumee Ihthihaad Party (GIP), was arrested after reportedly trying to sell a sex tape of a Supreme Court Justice.

Media reports have not identified the judge involved in the case. However, potentially compromising photos alleged to depict Supreme Justice Ali Hameed, who oversaw today’s trial of the BML case, began circulating on social media in March this year. The images appear to show the judge in a hotel room with a woman.

Debt claims

In October 2011, the High Court upheld Civil Court verdicts issued in late 2009 ordering Mahandhoo Investments and Kabalifaru Investments to repay millions of dollars worth of loans to BML.

In the first case involving Mahandhoo Investments, BML issued a US$23.5 million demand loan, a US$103,200 bank guarantee and US$30,090 letter of credit on July 10, 2008.

The second case involved a US$3.3 million loan issued to Kabaalifaru Investment. A Civil Court verdict on September 30, 2009 ordered the company to settle the debt within 12 months.

Meanwhile, a third case involving a Civil Court verdict in December 2009 ordered luxury yachting company Sultans of the Seas – with close ties to the DRP leader – to pay over US$50 million in unpaid loans, including incurred interest and fines, was also appealed at the High Court.

In September 2009, Maldives Customs filed a case at Civil Court to recover US$8.5 million from Sultans of the Seas in unpaid duties and fines for allegedly defrauding customs to import two luxury yachts, and in February 2010 the court ordered the company to pay MVR 110 million (US$7 million) as fines and unpaid import duties.

MP Thasmeen, this month appointed as the running mate of President Dr Mohamed Waheed ahead of September’s election, is himself expected to face a Supreme Court case over whether his parliamentary seat should be vacated over the issue of unpaid debts.

Former opposition Maldivian Democratic Party (MDP) MP Mohamed Musthafa announced his intention this week to file a case at the country’s apex court requesting a decision on whether Thasmeen should lose his seat for not paying back loans taken from Deputy Speaker of Parliament Ahmed Nazim.

Musthafa also raised issues concerning funding taken from the Bank of Maldives by companies including Mahandhoo Investments and Kabalifaru Investments, in which the DRP Leader is said to be a shareholder.

Musthafa was disqualified from the parliament in 2012 over an unpaid decreed debt, which the court concluded had rendered him constitutionally ineligible to remain in the seat.

As a consequence, he argued there was precedent for the court to declare MP Thasmeen’s Kendhoo Constituency seat vacant.

On June 17, the Civil Court ordered all Thasmeen’s bank accounts of frozen, and ordered immigration to withhold his passport following a case filed by Deputy Speaker Nazim to recover a debt of MVR 1.92 million (US$124,513).

Nazim filed the case requesting enforcement of a Civil Court verdict in April 2011 – upheld by the High Court in April 2013 – ordering the vice presidential candidate to pay back the money.

Nazim, an MP with the Progressive Party of the Maldives (PPM), initially sued Thasmeen in March 2011 to recover the remainder of a loan worth MVR 2.55 million (US$200,000).

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Auditor General’s Office to verify disputed figures in finance ministry audit report

The Auditor General’s Office has said it is verifying whether Vimla Construction Pvt Ltd was in fact given an advance payment of MVR 198.1 million (US$12.8 million) in February 2009 as flagged in the finance ministry’s 2011 audit report.

In a press release last week, the Auditor General’s Office said it was in the process of “further checking and verifying” the disputed figure stated in the audit report (Dhivehi) released earlier this month following questions raised in the media over its authenticity.

The case highlighted in the report concerned a large advance payment for delivery of construction materials for a tsunami-related housing project in Gaaf Alif Atoll.

Vimla has claimed in local media that the company received MVR 5 million (US$324,254).

“The audit report did not state that the advance payment to Vimla Construction for the Gaaf Alif housing project was made in violation of the law and regulations,” the press release stressed, adding that the audit office did not make any recommendations concerning the advance payment.

The case was uncovered during auditing of the finance ministry records, the press release added, and the figures were based on information collected from the ministry for its 2011 audit.

Auditors met with senior officials of the finance ministry on February 24, 2013 to verify the figures stated in the audit report and invited feedback from the ministry in a letter sent on March 19, 2013, the press release revealed.

“However, as a result of not receiving comments for the Ministry of Finance and Treasury’s 2011 audit report as of its publication date, this office believes that errors in the figures concerning the cases highlighted in the report are possible,” the Auditor General’s Office conceded.

The press release added that the Auditor General’s Office regretted “any difficulties” or “diminished name or reputation” caused by inaccuracies contained in its audit reports.

The press statement concluded by providing assurances to the public on the professionalism and impartiality of the audits conducted by the office.

The case flagged in the finance ministry’s audit report for 2011 concerned payments made on February 18, 2009 – just over three months after the Maldivian Democratic Party (MDP) administration took office.

However, following the controversial transfer of presidential power on February 7, 2012, President Dr Mohamed Waheed appointed members of then-opposition parties to cabinet and senior government posts.

Current Finance Minister Abdulla Jihad was also the finance minister during the last year of former President Maumoon Abdul Gayoom’s 30-year reign.

Auditor General Niyaz Ibrahim meanwhile told newspaper Haveeru last week that the office has uncovered a number of issues in the tsunami-related reconstruction projects commenced by the Gayoom government in Gaaf Alif atoll.

Niyaz told the local daily that the finance ministry’s audit report for 2011 was published after a long period awaiting comments from the ministry.

“There could be a mistake since they have not said whether there is anything they object to or not,” he was quoted as saying.

Tsunami reconstruction

Niyaz also revealed that the Auditor General’s Office was in the process of completing a special audit of the tsunami reconstruction projects, which would also shed light on the disputed advance payment made to Vimla Construction.

According to the section of the audit report dealing with the advance payment, the “Reconstruction and Development of Gaaf Alif Atoll Project” was to be undertaken with loan assistance from the Saudi Fund.

However, in 2011, the finance ministry spent MVR 17.6 million (US$1.1 million) out of its special budget to transport material needed for the project from the Hithadhoo Regional Port in Addu City to Gaaf Alif atoll.

While Vimla was contracted for the project and given an advance payment, the report explained that a foreign company named Performance Builders was contracted under a “deeds of assignment” on March 25, 2010 to replace Vimla on the project as the local company had been unable to complete the contracted work.

According to local media, the project was eventually awarded to the Maldives Transport and Contracting Company (MTCC) after Performance Builders also failed to complete the work. The government-owned company reportedly faced a loss of MVR 17 million (US$1 million) due to nonpayment.

The case is currently the subject of an inquiry by parliament’s Finance Committee.

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Resorts hope for end to “food and beverage nightmare” as Maldives suppliers run out of gas

Resort operators and businesses across the Maldives have been forced to dramatically alter menus and even temporarily close entire restaurants after weeks of disruptions to the supply of Liquefied Petroleum Gas (LPG).

The general manager of one exclusive resort told Minivan News that LPG shortage had created a “food and beverage nightmare” over the last three weeks.

“Comedy of errors”

Maldive Gas, a major supplier of cooking gas to both resort operators and restaurants across the country’s inhabited islands, released a statement (Dhivehi) on Thursday (June 20) saying it expected the LPG issue to be resolved today.

Apologising to its customers, Maldive Gas stated that it had been forced to ration LPG to clients to avoid running out, citing a malfunction in the engine of a cargo vessel bringing a shipment to the Maldives as the reason for the issue.

Asked whether the company had resolved the LPG shortage today as promised, Maldive Gas requested Minivan News contact a company representative at its plant on the island of Thilafushi, who was not responding to calls at time of press.

Speaking to local media today, Maldive Gas Managing Director Ahmed Wafir announced that the company had since removed restrictions over the supply of LPG.

“Gas is now available as it was available from us before, without any limit,” he was quoted as telling Sun Online.

Minivan News understands that other key local suppliers such as Villa Gas have also been affected by the recent LPG shortage. Local businesses that are customers of the company said today they had been informed the issue would be resolved within the next 24 hours.

Despite the supplier’s claims, a resort general manager told Minivan News on condition of anonymity that many of the country’s exclusive island properties had been forced to drastically cut their menus due to a “comedy of errors” by suppliers.

The source claimed suppliers had been experiencing gas shortages even before reports surfaced that a transport vessel had broken down around 200 kilometres from Male’.

According to the general manager, very little information had been given by suppliers over what had led to the rationing, which was having a direct impact on a large number of tourism properties.

“All resorts have been affected from what we’re told, and what I’ve heard from other resorts. This also happened the same time last year and it seems suppliers have not learnt from this,” the resort source claimed.

The general manager said that aside from having to minimise menus, catering staff on the property had been forced to set up barbecues around the resort to try and feed guests, with certain restaurants and an on-site pizza oven out of use for most of the month.

“Needless to say, there have been complaints from guests,” the source responded, when asked about the potential damage the shortage of LPG would have on the Maldives’ reputation as a high-end tourism destination.

The general manager added that although the resort had continued to receive a limited supply of around two bottles of LPG a day during the shortage, this had been insufficient to meet the property’s average daily consumption of eight.

“Suppliers have told us normal service will resume by this evening, I’m about 90 percent certain [it will resume],” the source said.

In Male’, local media reported that a number of cafes and restaurants had also been negatively impacted by gas shortages over the last week, with some even forced to close.

“Very scary”

Local businessman Fasy Ismael, the co-owner of several well-known restaurants in the capital including The Sea House Maldives, Jade Bistro and Oxygen, described the challenge of trying to secure LPG as “very scary” for businesses such as his in recent weeks.

“We weren’t sure when we’d get LPG in, and thought we might have to shut down for a couple of days,” he said.

Fasy claimed that even today, his restaurants had only been receiving half the total amount needed to run the businesses.

“For the last week, we haven’t been able to get a full supply from Maldive Gas. Villas Gas has not been able to supply us for two weeks,” he said. “We are lucky we use two different suppliers to meet our needs.”

Fasy said today that both gas suppliers had promised that supply would be returned to normal by tomorrow at the latest.

He said his restaurants had narrowly managed to stay open, thanks to a large reserve stock of 15 bottles.

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Immigration Department dismisses reports of expat system “flaw”, won’t rule out abuse by employers

Immigration officials have dismissed reports of a “flaw” in the country’s online expatriate registration system despite expressing concerns the system may be open to abuse by registered companies.

A department spokesperson confirmed this week that although new online registration introduced to try and streamline providing work visas to foreigners was not itself flawed, the system was nonetheless open to abuse from employers who allowed others to access their password-protected accounts.

The Department of Immigration and Emigration has also confirmed it has faced challenges in verifying whether construction projects were real or a front to smuggle foreign labour into the country, but told Minivan News it expects to resolve the issue from next month.

The comments were made after local newspaper Haveeru last week reported that a “serious issue” had been identified within the expatriate registration system installed by the National Centre for Information Technology (NCIT) that had allowed a steep rise in the number of foreign workers coming to the Maldives in May 2013.

Citing an anonymous immigration source, the paper reported that 4,000 expatriate workers had entered the country last month due to certain recruitment agencies abusing a “critical flaw” in the system. According to the report, the flaw allowed recruiters to obtain an extra quota of foreign workers in order to profit from their transfer into the Maldives.

The NCIT, which was charged with installing the component of the monitoring system, this week rejected suggestions that such a flaw existed in the program in a joint statement (Dhivehi) issued with the Department of Immigration and Emigration.

The expatriate quota system had been assigned through procedures set out by the Immigration Department to the NCIT, the statement read.

Once a quota is obtained, the NCIT stated that an expatriate would only be granted entry into the country upon providing a photograph, their passport bio page and other official documents required by immigration officials that are required to be entered into the system.

“Therefore, we can confirm that 4000 expatriates have not entered the country unknown,” the statement added.

The NCIT’s dismissal of the media report’s comes as the Maldives faces increasing pressure to tackle the issue of unregistered expatriates, with the country appearing on the US State Department’s Tier Two Watch List for Human Trafficking. The country has appeared on the list for three years in a row.

Employer responsibility

Although claiming no technical flaw had been found by authorities within the expat system, immigration spokesperson Ibrahim Ashraf told Minivan News that registered employers had a responsibility to prevent abuse of their company accounts.

Ashraf said all companies employing foreigners had to be registered on the expatriate registration system through official documents like a business registration certificate and a valid national ID.

If approved, he said the employer was then assigned through the online account a maximum quota of foreign workers depending on the size of their business or the specific project they were working on. These accounts are protected with a password.

Ashraf said there were suspicions in the Immigration Department that some employers may have provided access to their unique account to employees, who were in turn bringing in foreign workers under the company’s name – and while personally profiting from trafficking them into the country.

He compared the practice to a member of the public giving their ATM bank card and pin number to another individual, then trusting them not to draw money out from their account.

“People that are being trusted to use [the expat online system] may be doing wrong. I think this is what has been happening. Management maybe putting too much trust in other people to use this system,” Ashraf claimed.

“Systematic abuse”

Immigration Controller Dr Mohamed Ali has previously told Minivan News that while almost all foreign workers coming to the Maldives arrive under registered companies, some were finding themselves “illegally used” by employers due to “systematic abuse” of the visa system.

Foreign low-wage workers are often lured to the country by agents after paying a ‘recruitment’ fee or entering into debt – sometimes as high as several thousand dollars – that is shared between local agents and recruiters in the country of origin, most significantly Bangladesh.

In many cases the workers are then brought into the country ‘legitimately’ by a specially-created paper company, created using the ID of a complicit or unwitting Maldivian national, for the stated purpose of working on a ‘construction project’ of dubious existence.

Senior immigration sources confided to Minivan News in April this year that almost no human verification was undertaken by authorities to ensure workers were genuinely employed once a business or construction project was approved.

Ashraf this week confirmed that there had been “issues” in inspecting construction sites across both the country’s inhabited and resort islands due to a shortage of staff.

However, he claimed that by July 31, 2013, the Immigration Department was to begin inspecting construction and other projects requiring foreign labour with the assistance of local councils and key industry associations.

These groups are expected to include the Maldives Association of Tourism Industry (MATI) and the Maldives Association of Construction Industry (MACI), according to the Immigration Department.

Ashraf added that the government had recently approved the hiring of an additional 30 staff for the department in order to help oversee what is expected to be a comprehensive audit of the visa system. Officials would then move to penalise any abuse of the system by local employers.

Unregistered workforce

The exact scale of the Maldives’ unregistered foreign workforce remains unknown, with estimates ranging from between around 40,000 people to potentially double that amount.

Earlier this year, former MACI President Mohamed Ali Janah said an estimated 40 percent of the foreign employees in the construction sector were thought not to be legally registered.

Considering these numbers, Janah said at the time that he could not rule out the involvement of organised crime in certain employment agencies, which supply a large amount of foreign labour to building sites in the Maldives.

Janah claimed that 95 percent of construction groups operating in the country were Maldivian owned. However, as the country’s second largest industry on a GDP basis, the vast majority of employees in the sector were migrant workers, he said.

“We employ a huge workforce of some 60,000 to 70,000 people,” he explained at the time. “Of these people, sadly we have 40,000 to 50,000 who are expatriates.

By April of this year, Immigration Controller Dr Mohamed Ali confirmed that authorities had targeted the return of 10,000 unregistered workers by the end of the 2013.

The pledge to return a predetermined number of expatriates was criticised at the time by the Human Rights Commission of Maldives (HRCM), which raised concerns that some workers were potentially being punished for the actions of employers or agents acting outside the law.

While the government earlier this year launched a special campaign intended to raising awareness of the rights of foreign workers, NGOs and independent institutions continue to identify human trafficking as a significant issue needing to be addressed in the country.

Human rights groups in the Maldives have for instance continued to criticise both the present and former governments for failing to pass legislation that would allow authorities to press charges against individuals directly for the offence of human trafficking. The legal measures to do so are presently under review in parliament.

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Mega Maldives negotiating with tax authorities over account freezing dispute

Airline Mega Maldives continues to operate scheduled flights to and from China this week, despite the Maldives Inland Revenue Authority (MIRA) taking action to freeze the company’s accounts on Monday (June 17) over disputed tax payments.

MIRA announced this week that it had decided to freeze bank accounts linked to Mega Maldives with the assistance of the Maldives Monetary Authority (MMA) over what it claimed was the company’s refusal to cover tax flagged in an audit report.

The airline has stated that it was engaged in negotiations with local authorities to try and resolve the dispute with MIRA concerning the state’s interpretation of the requirements under which withholding tax must be paid.

The company has maintained that it remains fully up-to-date in terms of covering profit and service tax payments to MIRA.

Mega Maldives, which is operated through a US-Maldives private joint-venture under the name Mega Global Air Services (Maldives) Private Limited, is the country’s second scheduled airline.

The airline commenced operations in 2010 and completed its maiden flight in January 2011, where it flew over 230 passengers from Hong Kong to Gan International Airport.

During July 2011, the airline went onto become the first Maldivian carrier to provide flight services from Shanghai to Male’ with 200 passengers.

MIRA’s Director General of Audit and Finances Fathuhulla Jameel told local media this week that a tax audit carried out by the authority revealed that Mega Maldives owed large sums of money as unpaid taxes.

According to Jameel, the total amount of money MIRA is owed by Mega Maldives stood at more than MVR 13 million (US$ 843,060.96) as of this week.

The airline is also required to cover unpaid fines valued at around MVR 1 million (US$ 64,850.84) resulting from the company’s failure to pay taxes and produce statements, according to MIRA.

Speaking to Minivan News today, Jameel said that MIRA had been acting in accordance with the law, adding that withholding taxes were imposed under section sixof the Corporate Profit Tax Act.

“We have a two stage appeal process. One is if they are not satisfied with our figures in the tax audits, then there is a department in MIRA which they can appeal. If that fails, they can appeal to the Tax Appeal Tribunal. So far, to my knowledge, no appeal has been made to Tax Appeal tribunal. If they are unhappy with our figures, there are ways they can find a solution,” he said.

No funds in the frozen accounts: MIRA

MIRA has revealed that the accounts of Mega Maldives frozen by the MMA were found to have insufficient funds to cover the outstanding payments.

“We believe that they will produce the required tax statements and pay the money owed to the authority. Having failed to pay the amount, we froze their accounts and when we checked, there were no funds in those accounts,” Jameel said.

According to Jameel, of the two frozen accounts, one had only US$ 10,000, while the other contained MVR 9,000.

“Some accounts are still not frozen. But we had requested to freeze all accounts under the airline. They can still deposit money even if the account is frozen,” Jameel added.

Jameel told Minivan News that negotiations were already under way with the airline, which would be allowed to make payments in installments once an initial 30 percent of the outstanding payment to MIRA has been covered. However, Jameel said it was difficult to detail the exact figures or the duration over which installments could be made as negotiations were ongoing.

Jameel said that MIRA had formally requested the MMA to freeze the company’s accounts last Thursday (June 13) after several attempts to retrieve the money were unsuccessful.

“As a last resort, we requested [MMA] to freeze their account. We had made the decision [to freeze the account] after all the attempts made to collect the money failed,” Jameel said. “MMA will order all the banks to freeze the accounts of that airline. I presume the accounts may now have been already frozen.”

Airline negotiations

In a press statement issued yesterday (June 18 ), the airline claimed that it was currently in negotiations with MIRA and the government to try and resolve the dispute.

“The tax that this airline is required to pay as per Maldives Inland Revenue is the withholding tax. This tax, by any means, is not similar to taxes such as the Corporate Profit Tax (CPT) or the Goods and Services Tax (GST),” read the company statement.

“Generally, corporations are required to pay taxes based on their profits or based on the income that is generated. These two taxes [CPT and GST] are being regularly paid to MIRA as required by the law,” it added.

Withholding taxes are based on a local company’s spending on services provided by expatriates. Mega Maldives, being an operator of wide body flights, said it was continuously required to seek foreign technical assistance.

Interpretation issues

The airline has said that according to MIRA and the Maldivian government’s interpretation of tax laws, several services required by the airline had fallen into the criteria requiring payment of withholding tax. The tax currently stands at 10 percent of the costs paid in such services.

“Assessing the figures, having to pay an additional 10 percent as tax means 10 percent is added to the cost incurred by the airline,” it claimed.

The airline argued that under this interpretation, it was required to pay withholding tax on top of the cost of spare parts required to be made available by each airline in the country as per the Maldives Civil Aviation regulations. Withholding tax was also said to have been added to the general cost of operating international flights.

“Since the stated expenses are required by an international carrier, imposing a huge tax on such expenses is a financial burden on the airline that is resulting in huge losses. The Maldives Civil Aviation Authority which is helping this airline in the negotiations with MIRA has also highlighted that such taxation could be detrimental to the aviation industry,” it claimed.

Speaking to Minivan News, Chief Executive Officer of Maldives Civil Aviation Authority, Hussain Jameel confirmed that the authority had been assisting the talks between the airline and MIRA.

However, he declined to provide further details at the current time.

Mega Maldives stated that as a result of financial difficulties incurred by the company over the dispute concerning the withholding tax, it had been forced to reduce its number of scheduled flights.

The airline maintained nonetheless that was working on expanding its fleet, which currently consists of several aircraft.

In its statement, Mega Maldives called on authorities to create an environment for aviation companies to have a profitable and viable business in the country.

Operations interrupted

Local media reported earlier this week that the Maldives Airports Company Limited (MACL) had originally denied approval for a Mega Maldives flight to leave the country over its failure to pay for the airport handler’s services.

However, the flight was allowed to leave the country after the airline and MACL finally came to an agreement over payment of the services.

The flight, which was expected to depart at 5:10pm on Monday evening, was only able to leave more than two hours later at around 7:20pm.

According to MACL’s Managing Director Dr Ibrahim Mahfooz, both Mega and the MACL had discussed the issue of pending payments, and Mahfooz told local media outlet Sun Online that Mega had agreed to make the payments to MACL.

Sun Online reported that following the grounding of Monday’s scheduled flight by the airline, it had agreed to pay MACL a sum of US$ 235,000 and to pay an additional sum of US$ 389,000 on Wednesday and Thursday.

Meanwhile, speaking to Minivan News about the dispute today on condition of anonymity, a senor figure within the country’s tourism industry said that Mega Maldives had in recent years played a vital role in connecting Maldives to China.

China last year overtook established European tourism markets to become the leading source of visitors to the Maldives. The senior tourism source said that air connectivity and flight frequency played a significant part n the fortunes of an isolated destination like the Maldives.

“An impact on any airline operating to the Maldives will impact the country’s tourism sector,” the source claimed.

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Political instability is key concern at Maldives renewable energy investment conference

Participants attending this week’s Maldives International Renewable Energy Investors Conference consider the event a “good beginning”, but claimed political instability was presently hampering foreign investors’ confidence in the sector.

The two day event, which concluded yesterday (June 17), aimed to facilitate long-term partnerships between international investors, project developers, energy companies and utilities groups in order to enable successful renewable energy projects throughout the Maldives.

The Ministry of Environment and Energy hosted conference at Bandos Island Resort and Spa in an effort to boost investor confidence and attract renewable energy financing.

Although Environment Minister Dr Mariyam Shakeela noted that the conference was successful, she also urged participants to “reflect on our mutual needs” and emphasised that investments will be “protected, facilitated, and supported by the government” during her concluding speech yesterday.

“Your need to promote your [renewable energy] products and our need to reduce energy costs – that of course is a huge issue as was mentioned here so many times – and also of course to combat climate change,” said Shakeela.

“We currently rely extensively on imported fossil fuels, as we have heard here over and over and over again these last few days. Yet paradoxically, many islands have ample but underutilized renewable energy resource potential,” she continued.

“The Ministry of Finance and Treasury is working to create an enabling environment for investments in general, which I believe is a concern of a lot of investors,” she added.

Meanwhile, Maldives-based representatives from the World Bank (WB) and Asian Development Bank (ADB) present at the conference pledged their continued support in an effort to attract renewable energy investors.

ADB Director Mr Yongping Zhai pledged to “go as far as it costs” to transform Maldives into a renewable energy dependent country, as opposed to oil dependent, according to the Environment Ministry.

However, he noted that although the Maldives has the commitment, market potential, resources, and willing investors for renewable energy, there is a “missing link to put these pieces together”.

“In theory things should work, but why things are not working so far is [the lack of] the right business model,” said Zhai. “That’s the purpose of this conference and of the ADB’s work.”

The WB considered the conference to be a “good initial first information gathering” event for facilitating renewable energy investments and emphasized that it was working very closely with the Maldives government to develop the energy sector and national financial institutions, said WB Senior Energy Specialist Abdulaziz Faghi.

In an effort to boost investor confidence, the Environment Ministry emphasised the WB would guarantee any investments made in the Maldives.

“One of the issues facing the private sector investing in any sector is the payment guarantee and their concern with the return on investment,” State Minister for Environment and Energy Abdul Matheen Mohamed told Minivan News yesterday.

He explained that the government of Maldives has allocated US$5 million from the International Development Association (IDA) financing though the World Bank, which will be leveraged up to US$ 25 million.

“So basically the World Bank will be issuing a guarantee for this amount to give guarantees to the investors investing [funds] under the scaling-up renewable energy program (SREP) investment plan,” said Matheen.

He noted that conference participants concerns have “been resolved though the guarantee facilities introduced by the World Bank”.

Foreign investors lacking

Following the conference yesterday, Renewable Energy Maldives Managing Director Dr Ibrahim Nashid told Minivan News that he believed banks and foreign investors crucial to revitalising the national energy “didn’t turn up” at the event.

“The main idea was to bring investors here, but I don’t think that has happened,” said Nashid.

He explained that while Maldives-based institutional representatives from the WB, ADB, United Nations Development Programme (UNDP) and various other Maldivian institutions attended the conference, individuals with authority to authorize lending and/or donor funds were not present.

“Basically there wasn’t any financial institution that could give the finance or lend the money,” said Nashid. “No international banks came and what is very noticeable there wasn’t Indian investors. Not a single Indian company was represented.”

“ADB was saying they have earmarked funds for the Maldives, but their idea was also to leverage that with some other lending institution and that was not there,” he added.

Nashid noted that none of the Maldivian banks were present at the conference.

“The Islamic Development Bank (IDB) was there, but not the Islamic Bank in Male’, even the Bank of Maldives didn’t attend,” said Nashid.

“It shows the confidence that everybody has, [which is] the reason the World Bank is talking about giving a bank guarantee,” he continued.

Although Minister Shakeela was asked many times about what the government would do to guarantee investments “she skirted the question saying the ADB and WB is giving the guarantee,” according to Nashid.

“That was not the issue, the issue is what happens to our investments,” he said. “The GMR case is very very open and obvious to everyone. The issue of political instability was very much skirted, [but] everybody knew.”

Nashid claimed that most conference participants who discussed renewable energy investments said a decision would not happen until after the presidential election scheduled for September.

“We need political stability here, without political stability I don’t think any project is going to take off,” said Nashid.

“We can do the preparation of paperwork, etc. but money will not be put on the table. That’s the message we get from abroad,” he added.

These sentiments were echoed by conference participants representing various private sector businesses.

“It was a good start, but this is really just a beginning. There were not very many investors present,” an infrastructure company representative told Minivan News on condition of anonymity.

“The three things investors are looking for are credibility, stability, and return on the investment,” a telecommunications company representative told Minivan News on condition of anonymity.

The source explained that political instability was the main concern preventing investors from committing to renewable energy development. He also agreed with another conference participant’s observation that political instability in the Maldives was the ‘elephant in the room’ at the event.

“There were very few investors present, which is not surprising. No one is going to be eager to invest [in developing renewable energy] until after elections,” he added.

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Police arrest five people during protest over 75 laari increase in Hulhumale’ bus fares

Police have confirmed that a total of five people were arrested during a protest on Hulhumale’ yesterday (June 14), held to raise concerns over an increase in the price of bus fares on the island.

Three males, one female and a minor remain in custody today after they were charged with offences including failing to obey instructions and breaking past police lines during the demonstration. Demonstrators reportedly highlighted a number of concerns, including a decision to raise the cost of tickets on the Hulhumale’ bus service from MVR 2.25 (US$0.15) to MVR 3 (US$0.19).

The protest, which began at 3:00pm yesterday afternoon and ended roughly three hours later, coincided with efforts by the Maldives Transport and Contracting Company (MTCC) to introduce new larger buses on the island, Sun Online reported.

Ismail Fariq, an executive for MTCC’s Transport Department said today that the new buses represented an MVR 8.6 million (US$558,000) investment by the company in an effort to provide a “total improvement” in service for passengers by offering air conditioning and more seating.

“The existing buses that we have been using are almost broken down, but these new buses we hope will offer a new benchmark in public transportation services,” he said.

With the new buses coming into service yesterday, Fariq said that passengers would be able to use the buses for free until tomorrow, when the new MVR 3 fare would be implemented.

He said the increased fare was essential to cover the company’s investment in the new vehicles.

“This increase in quality comes with the change in price,” Fariq argued. “As a business we need a reasonable return on investment and I do not believe that 75 laari is a big change for these improvements.

Demonstrators opposed to the increase nonetheless yesterday gathered in the area of Hulhumale’ where the new bus service was scheduled to be introduced to voice their concerns. They also demanded improvements to the ferry boat service presently operating between Hulhumale’ and the capital, according to local media.

Improvements to the ferry service were a much more pressing consumer issue than the provision of air conditioned buses in Hulhumale’, the protesters said according to Sun Online. The criticisms were first made after the state-owned MTCC purchased four new vehicles last month.

The company was quoted in local media at the time as claiming the news vehicles would allow it to increase the capacity of daily bus passengers on Hulhumale’ from 8,000 to 10,000 people, as well as expanding the number of services it offered on the island.

In January this year the MTCC announced it would begin charging a six percent Goods and Services Tax (GST) on all ferry and bus services that it operates as required by the Maldives Inland Revenue Authority (MIRA).

The cost of a ticket for a single journey on the Hulhumale’ bus was as a result increased to MVR 2.12 at the time.

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No satellite communications, no rescue tug, contaminated fuel: the final voyage of the MV Asian Express

A Maldivian cargo ship that sunk of the coast of Kochi was on its final voyage, reports Indian media.

The 35 year-old Lily Enterprises vessel, MV Asian Express, was travelling from Port Md Bin Qasim in Karachi to Male when it encountered engine trouble, reportedly after being fuelled with contaminated oil.

“Captain Ahmed Shakir told coast guard officials that the fuel filled from Port Bin Qasim could have been contaminated, which caused the vessel’s turbocharger to pack up, resulting in engine shutdown,” reported Indian newspaper The Hindu.

“For two days we were in deep trouble,” Captain Ahmed Shakir told the Indian Express. As per the original schedule, we were supposed to reach Maldives by June 10,” Shakir said.

“Adding to his troubles was the two-to-three-metre vertical crack on the starboard side of the ship below waterline and failure of the communication system,” reported the Deccan Chronicle.

According to marine tracking reports, the Indian Coast Guard ship Varuna arrived to assist but was forced to abandon attempts to fix the engines because of rapidly deteriorating weather conditions, with wind gusting at up to 50 kilometres an hour.

Commanding officer of the CGS Varuna, K M Arun Kumar, told the Hindu the rescue effort was also hampered by heavy swell and poor visibility.

“To top it all, Asian Express had no satellite phone and a message was relayed to it through a nearby vessel, MV Golden Shui, before we reached the area,” Kumar told the paper.

“The vessel’s agent, in the meantime, informed that tug Villa-2 which had been asked to tow the vessel to safety had not yet started from Male. In any case, the tug would not have reached the site before the morning of July 14. Meanwhile, the master informed us that the three hatches of the ship were flooded up to 10 metres after a wide crack on its starboard side.

“Soon, he said they would be abandoning the vessel and was instructed to use the life boats. However, the two lifeboats were non-operational and had to be pulled manually, even as the drifting vessel and the heavy swell posed a real danger to Varuna itself. It was already dark when every crewmember of the vessel in distress was taken on board Varuna and given food and medicines.”

Instead the coast guard evacuated all 22 crew members, including 18 Maldivians and four Indian nationals and transferred them to Kochi.

Its crew rescued, the vessel sank with its cargo of 4000 tons of cement and 2400 tons of sand.

The MV Asian Express was carrying aggregate imported from Pakistan, after a shortage began impacting the Maldives’ construction industry.

Aggregate was previously imported to the Maldives from India under a special quota, however this was temporarily revoked on February 15 amid a breakdown in the country’s relationship over the government’s eviction of Indian infrastructure giant GMR and ongoing mistreatment of Indian nationals working in the country.

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