Category: Business & Tourism

Maldives business news

Indian coastguard rescues crew of Maldivian cargo vessel

The Maldivian cargo ship MV Asian Express sank on Wednesday evening 300 kilometres west of Kochi, after its hull reportedly cracked below the waterline.

The ship, which was travelling to the Maldives from Pakistan carrying a cargo of sand and cement, suffered an engine failure on Tuesday evening and began drifting, reported IBN Live.

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.

The Indian coast guard subsequently evacuated all 22 crew members, including 18 Maldivians and four Indian nationals.

The Maldives National Defence Force (MNDF) confirmed it had received the first distress reports, and said the Maldivian crew were being transferred to Kochi following total loss of the vessel.

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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Government halts transfer of airport operations to MIAL, pending arbitration

The government has declared that the Maldives Airports Company Limited (MACL) will continue operating Ibrahim Nasir International Airport (INIA), apparently abandoning efforts to transfer operations to the newly-created Male’ International Airport Limited (MIAL).

The President’s Office said in a brief statement today that while the government had intended MIAL to take over the airport’s operation, the decision to abandon the attempt “was was made as the termination of the contract between the government of Maldives and GMR [is] currently in the arbitration stage.”

The decision follows an increasingly fractious series of emails between MACL and Axis Bank, one of the lenders to the GMR-MAHB airport consortium which had its concession agreement to upgrade and operate the airport summarily terminated by the new administration in December 2012.

While the sudden termination of the agreement is the subject of current arbitration proceedings in Singapore, Axis Bank separately called in US$160 million worth of loans for the project which had been guaranteed by the Maldivian Finance Ministry at the time the deal was signed.

With arbitration ongoing, Axis Bank expressed concern that the creation of MIAL was an attempt to dissipate MACL’s assets ahead of a verdict and turn it into a shell company, and sought a guarantee from the government. That correspondence led to an exchange of heated letters from Singapore-based law firms representing both sides, particularly after Finance Minister Abdulla Jihad appeared to contradict earlier assurances from MACL by informing local media the transfer was expected to be completed by July 1.

MIAL’s appointed CEO Bandhu Saleem however told Minivan News at the time that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Saleem is now to be appointed managing director of MACL, reported Sun Online citing a government official, with MIAL to be abolished ahead of a final decision on the matter.

Uncertainty

National political turbulence and uncertainty over the MACL-MIAL transfer in May led the global body representing the world’s airports, Airports Council International (ACI), to caution its members over the government’s potential “sale of equity in this entity to another airport operator.”

“ACI members are advised to conduct due diligence while considering any investment in the Maldives, considering the latest developments, uncertainty of outcome of elections, the legal and financial risks of the current arbitration and the nascent legal framework,” the email stated, warning potential investors that “any leadership changes arising out of the elections [could] have a material impact of the future of the Male’ airport and the decision of expropriation.”

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President Waheed ignored advice on GMR termination, PPM alleges

The Progressive Party of Maldives (PPM) has accused President Dr Mohamed Waheed of ignoring the advice of his coalition government by abruptly terminating the US$511 million airport development contract with Indian infrastructure group GMR last year.

PPM MP Ahmed Nihan said that while the PPM believed terminating the GMR contract had been the right decision, President Waheed had nonetheless personally taken an executive decision to cancel the agreement without listening to the party’s advice in seeking a compromise with the company and the Indian government.

However, the PPM’s coalition partners today accused the party of making “contradictory statements” regarding the decision to terminate GMR’s concession agreement, accusing its senior leadership of trying to terminate the deal at the time without discussion or following due process.

The allegations against President Waheed surfaced following the visit to India last week by former President and PPM founder, Maumoon Abdul Gayoom, who pledged his party would seek to restore relations with India damaged by the government’s summary eviction of the GMR.

While Gayoom ultimately blamed former President Mohamed Nasheed for not obtaining parliamentary approval and “consulting all political parties” before signing the deal with the GMR-Malaysian Airports consortium in 2010, he was also critical of the present administration’s handling of the termination.

“Had Nasheed consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own,” he said. “Unfortunately, this was not done and suddenly there was this unhappy ending,” Gayoom was reported as saying in the Hindu.

“Better” handling

MP Nihan said following a press conference held by the PPM in Male’ today that the party continued to believe the decision to terminate GMR’s concession agreement was in the best interest of the country.

However, amidst concerns about the subsequent negative impacts on bilateral relations from cancelling the deal, he stressed that the president could have handled the matter “better” in order to protect the relationship between the Maldives and India.

“We believe that the room was there to correct any negative relations with India,” Nihan claimed.

“This could have been much easier and perhaps a new approach could have been found to cancel the GMR contract,” he added.

Nihan said that as well as the GMR contract, President Waheed had on a number of occasions sought to take advantage of his position by making executive decisions against the wishes of his government coalition, all while trying to shift blame away from himself.

“We have seen [President Waheed] try to spin all good developments as being the result of his work, while anything that has gone wrong [in the government] is the PPM’s fault,” he said.

Following a PPM press conference today, Nihan added that the media has been shown two different letters sent from the party’s council to the government prior to the termination of the agreement last November that called to find a solution through dialogue.

Nihan also reiterated Gayoom’s comments that the manner in which the contract was not a “happy ending” in terms of its impact on bilateral relations with India.

“We are of the view that the agreement was only to be cancelled through due process of the law,” he said.

Nihan claimed that the contract dispute had also further exacerbated concerns held by the Indian government about treatment of Indian nationals in the country. He said this had in turn created difficulties for Maldivians in obtaining visas to travel to India for medical treatment.

Considering former President Gayoom’s 30 years spent in office, Nihan praised his efforts to try and strengthen bilateral relations with India.

The government’s sudden eviction of the Indian investor did not appear on a list of 11 grievances handed to all senior Maldivian reporters by the Indian High Commission in January.  The list instead included concerns such as discrimination against Indian expatriates and the confiscation of passports by Maldivian employers.

Tension

The argument over responsibility for the GMR contract termination has comes amidst reports of increased tension within the present coalition government, with PPM presidential candidate Abdullah Yameen last month criticising President Waheed over his alleged use of state funds for campaigning.

The PPM has nonetheless pledged to continue supporting President Waheed’s government up until September’s election, despite concerns about the decision to dismiss former Home Minister Dr Mohamed Jameel Ahmed after he decided to stand as MP Yameen’s running mate.

DRP response

The PPM’s recent criticism of President Waheed’s handling of the GMR dispute was today slammed as being “contradictory” by government coalition partner the Dhivehi Rayyithunge Party (DRP).

The party added that its members had previously come under heavy criticism from the PPM for advocating at the time that any termination of the GMR airport deal should be made via the due process of the law.

DRP Parliamentary Group Leader Dr Abdulla Mausoom told Minivan News that it was in fact senior figures in the PPM that were  among the most vocal supporters for terminating the GMR agreement.

“It is ironic that we are hearing these statements from the PPM, whose leader has been witnessed supporting rallies demanding the cancellation of the [GMR] agreement,” he said.

Dr Mausoom alleged that he had also been informed from “a reliable political source” present during government consultations last year over whether to terminate the GMR agreement that it had been PPM presidential candidate Yameen who personally advocated cancelling the deal without a need for discussion.

“Either there is no harmony within the [PPM], or this is all political talk to try and gain an advantage. Either was it is very irresponsible,” he said of the PPM’s recent comments about terminating the GMR concession agreement.

Mausoom alleged that contrary to the PPM’s claims, it had been the DRP which had advocated finding a legal means of terminating the GMR agreement at at time when fellow government-aligned parties had taken to the streets holding rallies demanding the airport be “reclaimed”.

Despite appeals by GMR that it was acting as a caretaker for running and improving Ibrahim Nasir International Airport (INIA), which would remain Maldivian-owned, efforts to cancel the concession agreement – which was vetted by the World Bank’s International Finance Corporation (IFC) – intensified up to November.

On November 13, just ahead of the contract termination, a seaborne armada of about 15 dhonis carrying flags and banners circled the airport seeking to increase pressure on the government to “reclaim” the site from GMR.

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Health Trust Fund fundraising events raise over MVR 5.5 million (US$357,142)

Following a week of fundraising events the Health Ministry has raised over 5.5 million MVR (US$357,142) for the Health Trust Fund established in late April, falling short of the MVR 270 million (US$ 17,532,450) needed for health sector services.

The Health Trust Fund was established 20 November 2012 under Ministry of Finance and Treasury regulations and inaugurated on April 29, 2013.

The only way the Health Trust Fund can be maintained is through donations of sufficient assets and in this regard government and private sector contributions are very important, Minister of Health Dr Ahmed Jamsheed recently told local media.

He explained that the health sector requires an additional MVR 270 million (US$ 17,532,450), which requires public contributions and cooperation.

Previously health sector services were “covered by the people”, however following the start of the Aasandha universal health insurance scheme on 1 January 2012 the government of Maldives needed a “huge amount of finance” to cover expenses, said Jamsheed.

Therefore, the Health Ministry organised a series of fundraising events to “commence activities to raise funds, not to gather all the funds need to cover all health sector services,” he added.

“We want health services to be sustainable by putting an end to service disruptions due to machinery breakdowns as well as provide a systematic way for people to give in-kind donations,” Health Ministry Director and fundraising media team member Thasleema Usman told Minivan News yesterday (June 8).

“There has always been a budget shortfall at the Health Ministry, there has never been enough money,” Usman said.

“We wanted to try and do something for the Maldivian people, additionally there are also people who want to contribute [to the fund] for the benefit of the public,” she added.

Usman explained that the various fundraising events were organised as a start for the trust fund and to raise awareness among the public.

“We didn’t want this to be a ‘once off’ thing,” she said.

“Although the total amount of funds raised are still being tallied, as of this afternoon (June 9), the total reported was MVR 5.5 million (US$357,142), with over MVR 2 million (USD$129,870) in cash donations and more than MVR 3 million (US$194,805) from in kind contributions,” Maldives Food and Drug Authority (MFDA) Senior Scientific Officer and fundraising media team member Mariyam Shabeena told Minivan News today (June 9).

Budgetary needs

The health sector budgeted MVR 2.2 billion (US$142,857,000) for 2013, however around MVR 1.1 billion  US$71,428,500) or 50 percent of the total budget is allocated for the National Social Protection Agency (NSPA), according to Usman.

She said that over MVR 5 million is needed for social safety net subsidy programs, such as single parent’s allowance, foster parent’s allowance, disability registration and benefit and electricity subsidies, which fall under NSPA.

NSPA is also responsible for managing the national social health insurance scheme, a public-private partnership with Allied Insurance.

“Aasandha requires 1.13 billion MVR (US$73,376,550) to provide actual health care,” Usman said.

“An additional MVR 500 million (US$32,467,500) is required for Indira Gandhi Memorial Hospital (IGMH) operations and the Health Ministry budget also includes institutions, such as the Maldives Food and Drug Authority (MFDA), National Drug Agency (NDA), etc,” she continued.

Usman explained that the health trust fund will be transparent, with legal mechanisms to manage the money.

“The Health Ministry can only have a sustainable trust fund if funds are raised legally, by abiding with Finance Ministry regulations,” she said.

“The fund has a very well written policy that explains how the money will be used and what has been used,” Usman continued.

“A nine member committee chaired by the Health Minister will oversee the fund, which has a grading system to determine where funds are need most.”

Members of the public making contributions can earmark their donations for a particular island or association, but the trust fund committee needs to know what is being earmarked so contributions are not wasted, Usman added.

Events

“We have received a lot of support from the media, they have been a very, very big help,” said Usman.

A one hour telethon pre-show was broadcast nationwide from June 1 – 7 on four TV stations – MBC, VTV, DhiTV, Raajje TV – and three radio stations – MBC, VTV, DhiFM to raise awareness about the fundraising events.

“The broadcast reports showed where we are, the assistance required, and the grand realities of how the Health Ministry spends their budget,” Usman explained.

The actual telethon was held Saturday ( June 8 ) from 6:00am to midnight. It was kicked off with a sponsored walk along one of Male’s main thoroughfares.

Additionally, two charity football matches were held in Male’s National Stadium Friday (June 7), with Maldivian media presenters facing off against film stars.

The film star women’s team was victorious, winning 4 – 0 , while the men’s media team won 3-0 after dominating overtime penalty kicks.

Proceeds from ticket sales and t-shirt purchases also contributed to the Health Ministry fund.

Furthermore, a Children’s Evening fundraising event was also held at Male’s Children’s Park (Kudakudinge Bageecha).

Donation boxes were also placed at ferry terminals in Male’, as well as IGMH, regional and atoll hospitals.

“Ultimately these events were very successful because we were able to raise so much money,” said Usman.

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No intention to transfer assets to MIAL: MACL to Axis Bank

The Maldives Airports Company Limited (MACL) and its lawyers have denied any intention of dissipating the state-owned company’s assets by transferring them to a newly-created, state-owned entity called Male’ International Airport Limited (MIAL).

MACL and the government of the Maldives are currently party to arbitration proceedings in Singapore after one of the lenders to the terminated GMR-Malaysia Airports (GMR-MAHB) development – Mumbai-based Axis Bank – called in US$160 million worth of loans which had been guaranteed by the Ministry of Finance.

A copy of the agreement from November 24, 2010, in which the Ministry of Finance guarantees the loans to GMR-MAHB, is signed and stamped by both then-MACL Chairman Ibrahim Saleem and Finance Minister Ali Hashim on behalf of the government.

Eviction and arbitration

In December 2012, the GMR-MAHB consortium, which had signed a 25 year concession agreement with the former government to manage and upgrade Male’s airport, was given a seven day eviction notice by the new government after it declared the concession agreement void ab initio, or ‘invalid from the outset’.

That decision is currently subject to arbitration proceedings in Singapore, with GMR-MAHB’s compensation claim expected to reach upward of US$1 billion. Axis Bank is pursuing the US$160 million in separate proceedings.

President Waheed’s government on March 14 meanwhile declared in a one-line statement that it was establishing MIAL as a new 100 percent state-owned company, and several weeks later announced the appointment of a board of directors including tourism tycoon and Chairman of Universal Enterprises, Mohamed Umar Manik, and Island Aviation Chairman Bandhu Ibrahim Saleem as managing director.

Finance Minister Abdulla Jihad informed local media on May 21 that MIAL would take over the operation of the airport under a management contract by July.

The apparent move to transfer MACL’s management functions to MACL led to a flurry of letters from Axis Bank to both MACL and the government, with the bank expressing concern that “if MACL ceases to manage and operate Male’ airport, and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell.”

MACL’s denial

In a letter responding to Axis Bank’s CEO Bimal Bhattacharyya, dated April 24, 2013, and obtained by Minivan News, MACL’s Managing Director Ibrahim Mahfooz claims “your insinuation that MACL is attempting to dissipate assets to avoid and satisfaction of any judgement is insulting and without any basis.”

“For the record, we can confirm that MACL has no plans to transfer any of its assets to another company,” Mahfooz writes.

He accuses Axis Bank of making a case on “hearsay and speculation”, and asks whether its threat of legal action was “part of a concerted plan with any other parties”.

“You have tried to assert that your claim of US$163,596,347.78 remains unsatisfied. We had in our previous correspondence to you made it clear that you do not have a valid claim against MACL,” Mahfooz states.

“At best your alleged claim (at its highest) is purely a monetary claim against MACL and GOM. Please set out clearly the basis in which you think your claim will not be satisfied by MACL and GOM in the event Axis Bank is not successful,” he writes.

That letter triggered a further flurry of correspondence between Axis Bank’s legal representation Norton Rose and MACL’s Singapore-based firm Advocatus.

The latter firm, acting on behalf on MACL in December 2012, successfully overturned an injunction in the Singapore Supreme Court blocking MACL from taking over the airport, on the grounds that the arbitration court had no jurisdiction to prevent the Maldives as a sovereign state from expropriating the airport.

In the Singapore Supreme Court’s full verdict, a copy of which Minivan News has obtained, Financial Controller for the Ministry of Finance, Mohamed Ahmed, “affirmed in an affidavit that the Maldives government would honour any valid and legitimate claim against it. He also stressed that the Maldives government had never defaulted on any of its payments.”

Lawyer representing MACL, Christopher Anand Daniel, “also accepted that if the arbitration tribunal found that the Appellants were wrong in their asserted case that the Concession Agreement was void ab initio and/or had been frustrated, but the Appellants had by then already gone ahead with the taking over of the airport, they would at least be liable to compensate the respondent for having expropriated the airport” (emphasis retained).

Legal barrage

Stern letters exchanged throughout late April and most of May between the two sets of lawyers suggest brewing disagreement over whether MIAL’s assumption of management responsibilities for the airport can be construed as a transfer of assets and an attempt to dissipate its assets in preparation for a costly verdict.

“Almost all of MACL’s income comes from MACL’s management and/or operation of Male’ Airport,” notes Axis Bank.

“The stated purpose for the incorporation of MIAL is for MIAL to manage and operate Male Airport. This is a role presently performed by MACL. The natural consequence of the above facts is that if MACL ceases to manage and operate Male’ Airport and MIAL instead performs that role, then MACL will lose almost all of MACL’s revenue stream, and become a shell company,” Axis Bank’s lawyers noted, adding that the government had made no effort to deny this despite repeated invitations.

In response Advocatus, in a letter dated May 10 and obtained by Minivan News, declared “Your client [Axis Bank] has no evidence that MACL is dissipating assets to begin with. It is obvious that your client is attempting to see if it can create a case by correspondence when it has none.”

Following Finance Minister Abdulla Jihad’s pledge that the transfer of assets to MIAL would be completed by July 1, widely reported in local media, Norton Rose wrote another letter noting “[the Minister’s] statements are in direct contradiction to MACL’s position in its letter of April 24 stating that ‘For the record, we can confirm that MACL has no plans to transfer any of its assets to another company.’”

“These new developments, stated in the various news reports, lend credence to Axis Bank’s legitimate concerns that MACL is in fact attempting to dissipate its assets in favour of MIAL or any other third party and, consequently, there will not be sufficient assets to satisfy any arbitral award that may be rendered in favour of Axis Bank against MACL in the arbitration,” the lawyers wrote.

Advocatus responded on May 29, again accusing Axis Bank off “desperately trying to create a case where none exists.”

“The Minister, who had given the interview in Dhivehi, had been misquoted in the English version of news reports you mentioned,” MACL’s lawyers stated.

“When he gave the interview, the Minister had in fact said that ‘asset management is going to be officially handed over to MIAL’,” Advocatus contended.

Assets, management and the draft agreement

Meanwhile, a working draft of an ‘Operations and Management’ agreement between MACL and MIAL, dated May 21 and obtained by Minivan News, notes that MIAL “is a company established with the primary objectives of operating, maintaining and managing the airport.”

The agreement states that while the Finance Ministry has granted MACL the lease of the site and rights to operate and manage the airport, “MACL, in the interest of the better management of the airport, and/or overall public interest, is desirous of granting to MIAL the functions of operating, maintaining and managing the airport.”

The agreement includes provision for the transfer of employees from MACL to the new company, and the requirement that it obtain an aerodrome certificate from the Ministry of Civil Aviation – the core authority issued by the state for a company to operate an airport.

It also noted that “no proceedings against MIAL are pending or threatened, and no fact or circumstance exists which may give rise to such proceedings that would adversely affect the performance of its obligations under this agreement.”

MIAL would be paid management fees by MACL, although the extent of these are not included in the particular draft obtained by Minivan News. The agreement does however set out how “MIAL shall, on behalf of MACL, deposit all monies received from the operation of the airport into one or more bank accounts in the name of MACL.”

Board issues

Despite the Finance Minister’s comments on May 21, MIAL’s appointed CEO Bandhu Saleem has told Minivan News that “until the arbitration is complete, I think it will be very difficult to start a new company.”

Minivan News is seeking to establish the current status of the new company. However further obstacles appeared this week in the form of the government’s Attorney General Aishath Bisham, who informed local media that President Waheed lacked the authority to appoint the boards of government-owned companies following the ratification of January’s Privatisation Act.

Instead, she said, the privatisation board created under that act operated as “a separate legal entity, and has the sole authority to appoint board members.”

Besides MIAL, President Waheed also in February appointed the board of the Maldives Ports Authority Limited (MPL).

“The Privatisation Board should investigate those cases,” suggested the attorney general.

Former President Maumoon Abdul Gayoom, whose Progressive Party of the Maldives (PPM) was among the most strident opponents to GMR-MAHB’s development of the airport, meanwhile appeared to have adopted a conciliatory tone during a visit to India last week to smooth troubled relations.

“[The cancellation] was a very populist move at the time as the public had a perception that the contract was bad for the country. The way it was handled was not good,” Gayoom was reported as telling Indian newspaper The Hindu.

“I am sad that this has somehow affected our bilateral relations. We want to overcome that and restore our relationship with India to its former level,” Gayoom told the paper.

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Raajje TV alleges Maldives Broadcasting Commission warning “biased”

Raajje TV claims a warning issued to them late last week by the Maldives Broadcasting Commission was biased, given their lack of transparent procedures for determining code of conduct violations.

“The Maldives Broadcasting Commission (MBC) sent a letter to Raajje TV last Thursday (June 6) saying the news aired on 23 February 2013 violated their code of conduct,” Deputy CEO of Raajje TV Yamin Rasheed told Minivan News today (June 8).

“Raajje TV strongly believes the commission’s decision is biased and will appeal to Maldives Media Council (MMC), the highest authority,” Rasheed stated.

MBC investigated a complaint that Raajje TV “broadcast false information” when its news-ticker displayed information that the Progressive Party of Maldives (PPM) had called on its members to slaughter Maldivian Democratic Party (MDP) members, Sun Online reported.

The commission’s investigation concluded that Raajje TV violated the code of practice by “showing images, sounds or texts of content that might damage a person’s dignity or is demeaning in nature”, as stated in articles 3(a), 5(a) and (b), according to local media.

“The ‘caution’ [letter MBC issued] is a warning. If that repeats they will take actions within broadcasting law, which might include temporary suspension of Raajje TV’s broadcast licence,” Rasheed explained.

He believes that MBC’s investigative decision making process is bias, because there is no transparent procedure for determining [code of] conduct violations.

“It is not clear how they concluded these statements, there is no clear procedure, it is not publicly announced,” said Rasheed. “I don’t know how they came to that conclusion.”

“We trust our journalists to report what they hear and see as true, they report the facts,” he stated.

Regarding the February 23 broadcast in question, Rasheed explained that “PPM officials called the MDP a terrorist group at that rally, we have the recorded footage.”

“Yet we don’t know what the opposition submitted against us, we don’t know specifically what the MBC is concerned about [regarding the code of conduct],” said Rasheed.

Rasheed claimed that MBC had “done nothing” in regard to code of conduct violations committed by Television Maldives (TVM), Villa TV (VTV), DhiTV and their sister network DhiFM, which “shows their bias”.

“DhiTV and VTV are constantly harassing politicians, for example saying Nasheed is anti-religious and many other things against him. DhiFM has shown pornographic footage, while the state broadcaster TVM has shown anti-social footage related to Maldivian culture of couples kissing, which is illegal,” alleged Rasheed.

VTV is owed by resort tycoon and Judicial Services Commission (JSC) member, Jumhoree Party (JP) Leader and MP Gasim Ibrahim.

DhiTV and DhiFM are predominantly owned by Champa Mohamed Moosa, a prominent businessman and resort owner in the Maldives.

In March 2013, MBC called for the Maldives Media Company, which owns DhiFM Plus, to air a statement of apology without any reservations from the station for violating the broadcasting code of conduct after allegedly airing pornographic content during a late night news show.

In July 2011, MBC reprimanded DhiFM for repeated use of “indecent language” during programmes aired by the radio station and simultaneously broadcast live by sister network DhiTV in its “visual radio” segment.

The Maldives Broadcasting Commission, as well as its Vice President Mohamed Shahyb, were not responding to calls at time of press.

Maldives Media Council support

Raajje TV plans to appeal the MBC warning with the MMC on Sunday or Monday, according to Rasheed.

“The only thing we see from MBC is the intention to penalise media,” claimed Rasheed.

Conversely, Rasheed praised the MMC for their positive interactions with and support of free press in the Maldives.

“The media council is our parental body, was elected from within the media groups, and is more independent than the commission,” said Rasheed.

“They have a responsibility to protect our rights and regulations and are doing things for media freedom as well as giving us many training opportunities,” he continued.

“They are more all-encompassing in dealing with media because they deal with both print and broadcast journalism,” he added.

Rasheed hopes to receive MMC support in regard to the MBC warning issued, since they previously filed a case with the prosecutor general against the President’s Office for intentionally not cooperating with Raajje TV.

In April, the Civil Court ruled in favour of Raajje TV in its lawsuit against the President’s Office for barring the opposition-aligned television station from President Dr Mohamed Waheed’s press conferences and functions.

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PPM will address Maldives’ strained relationship with India: Gayoom

Former President Maumoon Abdul Gayoom has pledged during a visit to India that the Progressive Party of Maldives (PPM) will repair strained relations between the two countries should it come to power in September, local media has reported.

The three day visit, which concluded Thursday (June 6), saw the former president meet with dignitaries including Prime Minister Manmohan Singh to discuss bilateral relations and the impact of the Maldives government’s decision to last year cancel a US$511 million airport deal with India-based infrastructure giant GMR.

In interviews with Indian media, Gayoom expressed sadness that the Maldives’ relationship with India had been impacted by President Dr Mohamed Waheed’s administration deciding to evict GMR from the country with seven days notice.

Gayoom blamed Nasheed for not obtaining parliamentary approval and “consulting all political parties” before signing the deal with the GMR-Malaysian Airports consortium.

“This was a mistake. Had he consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own. Unfortunately, this was not done and suddenly there was this unhappy ending,” Gayoom was reported as saying in the Hindu.

Waheed’s government late last year declared the contract between GMR and the Nasheed government, which was vetted by the World Bank’s International Finance Corporation (IFC), as ‘void ad initio’, or invalid from the outset. It is currently disputing its obligation to compensate the company in arbitration proceedings, arguing that the termination clause could not be applied to a contract it had deemed invalid.

Gayoom told Indian media that former President Mohamed Nasheed – whose government was controversially replaced in February last year – had to take the majority of blame for the GMR contract dispute, despite not being in office at the time of its cancellation.

“The GMR experience was not a very good one for us. It began badly with [Nasheed] not informing parliament,” Gayoom was reported as saying in the Indian Express.

“By law, he should have had it passed by parliament. Some may even say it had an illegal beginning. [The cancellation] was a very populist move at the time as the public had a perception that the contract was bad for the country. The way it was handled was not good. I am sad that this has somehow affected our bilateral relations. We want to overcome that and restore our relationship with India to its former level,” Gayoom told the paper.

The government’s sudden eviction of the Indian investor did not however appear on a list of 11 grievances handed to all senior Maldivian reporters by the Indian High Commission in January, which instead included concerns such as discrimination against Indian expatriates and the confiscation of passports by Maldivian employers.

The list’s release was followed by the Indian High Commission issuing a statement in early February slamming local media in the Maldives for “misrepresentation and twisting of issues”.

Gayoom nonetheless told the Hindustan Times publication this week that he would endeavor to maintain strong bilateral relations with India, claiming that people who were “anti-GMR” were not “anti-India”.

The PPM is presently part of the coalition government backing President Waheed, whom Gayoom said had been requested to find an “acceptable solution” for both GMR and the Indian government that addressed concerns about the airport deal.

Fierce criticism

Among the most fierce critics of the GMR airport deal before its cancellation last year were the now government-aligned Dhivehi Qaumee Party (DQP ), led by President Waheed’s Special Advisor Dr Hassan Saeed.

Saeed in November last year appealed to Prime Minister Singh to terminate the GMR deal, writing that “GMR and India ‘bashing’ is becoming popular politics”.

While in opposition in December 2011, the DQP also released a 24 page pamphlet alleging that allowing GMR to develop Ibrahim Nasir International Airport (INIA) was “paving the way for the enslavement of Maldivians in our beloved land”, and warning that “Indian people are especially devious”.

Former Home Minister Dr Mohamed Jameel Ahmed, the DQP’s Deputy Leader at the time of the pamphlet’s publication, was recently unveiled as the running mate of PPM Presidential candidate Abdulla Yameen – Gayoom’s half brother.

SOFA a concern: Gayoom

Gayoom – described in the Hindu as a “sprightly 76 year-old” – also expressed concern about the Status of Forces (SOFA) agreement being negotiated between Waheed’s government and the United States.

“I am not happy. I didn’t want that to happen,” he said, warning that such a move risked upsetting the balance of power in the Indian Ocean.

A source within the PPM said former President Gayoom, during his 30 years as head of state had forged strong relations with various regional powers such as India and Sri Lanka.

The source said that while the handling of the GMR contract remained a controversial issue, the recent strain in the relationship between India and the Maldives was the result of a number of factors, including “certain difficulties” facing expatriate workers from India living in the country.

“We have a large number of professional expatriates from India working here in health, education and accountancy. The [Indian] embassy here in Male’ has aired some of the issues with us,” the party source claimed, adding that the Maldives also had grievances over obtaining visas to travel to India that needed to be resolved.

The party official claimed that Indian authorities had raised these issues not only with the PPM, but all other stakeholders both in government and the country’s political opposition, presently represented by the Maldivian Democratic Party (MDP).

Highs and lows

Despite admitting that every country has high and lows in their bilateral relations with neighbours, Indian High Commissioner to the Maldives Rajeev Shahare has previously emphasised what he called the country’s “unshakable” long-standing relationship with the Maldives.

“During my tenure, I will endeavour to further strengthen the relationship between India and the Maldives, which is already very strong with an unshakable foundation,” he said on April 10, shortly after his appointment.

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Government calls for immediate Tourism GST increase to 15 percent

The government has submitted a bill to parliament calling for the Tourism Goods and Services Tax (T-GST) to be increased from 8 to 15 percent, effective immediately.

The bill was submitted by Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed last week on behalf of the government.

A T-GST of 3.5 percent was first pushed through parliament by the former government in 2011, with planned increases to 6 percent in 2012 and the current 8 percent in 2013.

Prior to the introduction of the T-GST, the primary sources of state income from the tourism sector included resort rents, import duties, and a flat eight dollar a night ‘bed tax’.

During the first month following the introduction of the T-GST, the government collected US$7.2 million from 800 of the newly registered 871 tax papers, a figure that revealed the Maldives had been underestimating the total size of its main industry by a factor of three.

Economic crisis

The proposal to increase the tax comes as the Maldives faces increasingly dire economic circumstances.

Finance Minister Abdulla Jihad revealed in April that the government had exhausted its annual budget for recurrent expenditure (including salaries, allowances and administration costs) in the first quarter of 2013, and announced the suspension of all development projects.

The State Bank of India’s refusal to roll over loans at the start of the year has seen central bank reserves at the Maldives Monetary Authority (MMA) “dwindle to critical levels”, as noted by the World Bank, to barely a month’s worth of imports.

The State Electric Company (STELCO) – the country’s main supplier of electricity to inhabited islands – meanwhile revealed this week that the government had failed to pay electricity bills to the tune of MVR 543 million (US$35.2 million), and warned Parliament’s Public Accounts Committee in a letter that it faced cash flow problems and an inability to roll out new projects as a result.

T-GST rise contentious

Tourism industry figures have previously warned that a sudden increase in T-GST would have an immediate effect on the industry’s bottom line, as many resorts are locked into year-long supply and pricing agreements with tour operators.

An overnight near-doubling of the tax to 15 percent would have “serious ramifications on tourism and the Maldivian economy,” warned one resort manager.

“Most wholesalers will not accept price increases mid-contract irrespective of what clauses we put in a contract, as laws within the EU prevent this. Hence, this will have to be absorbed by the resorts,” he explained.

“I am aware that many resorts are struggling financially and this may be enough to put them over the edge. It will be very difficult to attract much needed foreign investment when the government continues to give these signals,” he added. “Why hamper and reduce demand to a destination that is already struggling to attract its core and traditional markets?”

The resort manager said that it was unreasonable to expect the resort industry to foot the bill for the state’s financial irresponsibility, “considering there have been limited efforts within the government to reduce its expenses. [The proposed tax increase] is short term thinking that will lead to a major default within the Maldivian economy and industry, if this proceeds.”

“What continues is a large bureaucracy that makes it as difficult as possible for tourism to provide high end service to its guests in order to maintain our positioning [in the market],” he observed.

“What is basically required is that these slow and lethargic government departments to go through a productivity and efficiency program. Make the processes more efficient, make civil servants accountable for productivity targets, reduce the government workforce and increase the percentage of Maldivian workers in resorts,” the manager suggested.

The issue here is that the resorts will need to cut costs and increase efficiency to counteract this. This may hamper guest service, product enhancements and refurbishment, and staff benefits which is again detrimental to the industry as a whole. The Maldives is a premium destination with premium levels of service and this tax increase would hamper this positioning. The Maldivian people will need to expect cost cutting and in some aspects retrenchments.”

New tax fatwa

Prior to the submission of the government’s proposed increase to the T-GST, local media reported that the Fiqh Academy had issued a fatwa (an Islamic ruling) prohibiting the government from levying taxes of any sort except under exceptional conditions.

Announcing the Fiqh Academy’s ruling in a statement on May 22, the Islamic Ministry noted that taxation was only permitted under Islam in certain circumstances.

“Tax can be taken from citizens to fulfill their basic needs, and only up to the amount required to fulfill these needs in cases where the state does not have enough money [for this],” the statement read.

According to local media, the fatwa requires that any tax money collected be “invested fairly and according to Islamic principles”.

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Employers facing investigation after 75 expatriates detained for illegally working in market

The Maldives Department of Immigration and Emigration has detained 75 illegal workers this week, and is currently investigating how many are victims of corrupt employment practices.

An immigration official, who asked not to be identified, said an unspecified number of the 75 expatriate workers detained in Male’ on Tuesday (June 4) had already been released as authorities sought to clarify the exact reasons for how they had ended up working in the capital’s market area.

Foreign nationals are not permitted under Maldives law to work at the market area, according to the Immigration Department.

Despite this, a total of 57 foreign workers were seized by authorities in April this year after having been found working at the market area of Male’.

A police media official confirmed yesterday (June 5) that officers had assisted in detaining 75 “illegal aliens” from the local market area of Male’, referring all further enquiries to the country’s immigration service, which has taken responsibility for the workers.

Immigration Controller Dr Mohamed Ali was not responding to calls from Minivan News at time of press to confirm how many of the detained foreigners were presently expected to be sent to the department’s “processing centre” – a gated compound on the island of Hulhumale’.  Unregistered expatriates are usually kept at the centre before being sent back to their respective countries.

Immigration Department Chief Executive Officer (CEO) Abdullah Munaaz – charged with overseeing the service’s monitoring and repatriation efforts – has meanwhile said that authorities were expecting to decide within the next 48 hours how many of the 75 expatriates may face deportation. With investigations ongoing into the case, he said that no further details on the detained workers could be made public at present, with an official announcement expected in the next few days.

The Maldives has come under 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.

Immigration Controller Dr 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.

Earlier this year, the Immigration Department confirmed that authorities had targeted the return of 10,000 unregistered workers by the end of the year.

This 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 being punished for the actions of employers and agents acting outside the law.

Worker release

The immigration source claimed that the country’s expatriate monitoring service was in the process of trying to individually identify whether the detained workers should be released, or deported.

The source said all those detained had not been registered to work in the market area, although some were suspected of being illegally made to do so by their legal employers.

“The paperwork is being done now to try to identify the people who are being put to work at these places by their employers,” the Immigration Department figure added. “These people are working in places where they are not registered to do so and we need to know why is this happening. Some of the employers are giving [the department] a different story to those provided by the expatriates.”

The anonymous source said that authorities would also be looking to take action against employers who may be supplying illegal labour.

The same source has claimed that the majority of the 75 detained workers were suspected of having absconded illegally from their Maldivian employer to seek better paid work elsewhere in the country.

Late last month, Immigration Department CEO Munaaz said his department had recently become aware of individuals posing as recruitment agents who were travelling to airports to poach foreign workers by promising them resort positions or higher pad jobs than the work they may have originally been brought to the country for.  Whether these jobs really exist is unknown.

“Now we have started to identify how this is being done and we are working to stop this,”Munaaz said at the time. “We know there are agents living here in Male’, some who are foreign nationals from the same countries, and they are bringing people over. We are in the process of breaking these rings.”

Foreign low-wage workers are often lured to the country by such brokers, 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 have confided to Minivan News that almost no human verification was undertaken by authorities to ensure workers were genuinely employed once a business or construction project was approved.

Moreover, despite the size and scale of the practice, not a single recruitment agent or labour trafficker has appeared before a Maldivian court.

Human trafficking

While the government earlier this year launched a special campaign intended to raising awareness of the rights of foreign workers, NGOs and 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 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.

In February, former President Maldives Association of Construction Industry (MACI) Mohamed Ali Janah claimed that an estimated 40 percent of the foreign employees in the sector were thought not to be legally registered.

Considering these numbers, Janah said 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.

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