Category: Business & Tourism

Maldives business news

Comment: Demand to nationalise airport threatens relationship with India

The sudden and inexplicable way in which an ‘investor-row’ involving the Indian infrastructure group, GMR, is getting a new twist in recent days in Maldives, if unchecked, has the potential to rock bilateral relations.

Coming just days after the successful visit of Indian Defence Minister A K Antony to the atoll-nation, the demands for the ‘nationalisation’ of the Ibrahim Nasir International Airport (INIA) in Male has left a bad taste. The larger questions however concern the internal political dynamics of Maldives, whose emerging international economic image could impact on the investment-climate when the nation can ill-afford any reversal in FDI inflows.

It was Antony’s second visit to Maldives in three years as Defence Minister, and the only one from another nation holding the post to have visited Maldives in recent history. It was also the first visit by an Indian Minister after the regime-change in Male in February this year.

Going by the joint statement issued on the occasion, the visit and the discussions reportedly were productive for both sides, indicating a greater level of security cooperation between the two South Asian neighbours. Among others, India has promised a new Defence Ministry building, an additional helicopter for the fledgling air arm of the Maldivian National Defence Force (MNDF) and naval personnel to help with the maintenance of the Maldivian fleet.

Minister Antony used the occasion to inaugurate the India-aided military hospital in Male with expert personnel on hand, and also laid the foundation for a police training school.

There is an acknowledged need for greater professionalisation of the Maldivian security forces. It has become necessary in the light of the events of the past years and more, when it became clear that the bifurcation of what once used to be known as the National Security Service (NSS) has not served the purpose. In a fledgling multi-party democracy, the uniformed forces came to be a burden to transition even after electoral changes had effected a quiet political transition three years ago.

The Maldives also wants military hospitals in the atolls, which could then be thrown open for serving the common man in the remote islands. Given the increasing levels of bilateral security cooperation between the two countries, New Delhi will also be posting a Defence Attache at the Indian High Commission in Male. At present, the Indian Defence Attache at Colombo, Sri Lanka, is also in charge of India’s specific security interests in Maldives.

Increasing relevance of sea-lines

The Indian initiatives come in the wake of the bilateral, bi-annual Dhosti-XI Coast Guard exercises that were put in place after the coup bid in 1988, which was aborted after India rushed immediate military help. This year’s edition of the exercises also involved neighbouring Sri Lanka, considering that all three nations face shared threats to peace and tranquillity of their shared Indian Ocean waters. Indications were that extra-territorial nations had shown an interest in these maritime exercises, which were promptly kept out, given the immediacy and relevance of the issues, like ‘Somali piracy’ in the shared neighbourhood.

The realisation in India and Maldives for increased offshore military cooperation flows from the increasing relevance of the Indian Ocean sea-lines to the overall geo-strategic concerns of the global community, starting with ‘energy security’. It has been equally reflected in on-shore policy and decision-making in New Delhi, which used to be reciprocated in more than a full measure in Male over the past decades.

In recent times, however, the non-security centric Indian interests and concerns in Maldives have seen enough ups and downs, threatening to unsettle the process, time and again.

This has often resulted in the Governments and policy-makers of the two countries having to start clearing the mess already generated before they could start off on something new. This has had the potential to put the clock back on bilateral cooperation. The delays often get attributed to India, particularly the institutionalised democratic decision-making processes inherent to the Westminster model of parliamentary democracy. Oftentimes, the reverse may be true. The current criticism and opposition to the INIA project, coming as it does from most partners in the government of President Mohamed Waheed, is only the latest in the series, but it also has the potential to rock the boat more violently than in the past, for a variety of reasons.

One agreement, multiple crises

All this does not mean that the government, polity and people of Maldives may not have reservations about the ‘INIA agreement’, which essentially is a lease deed with elements of large-scale investments for modernisation, thrown in, for the tourism-driven economy to upgrade the Male airport to international standards.

Some of the issues being flagged two years after the signing of the agreement – and after substantial progress has been made on the ground – are factors the like of which are involved in any private sector investment in any country. It would be more so when those investments are of overseas origin.

Maldivian political parties that were opposed to the airport contract, when signed, are in power at present. If nothing else, their constituencies would expect them to review the policy that they had derided when in the opposition.

In the Indian context, the ‘civilian nuclear deal’ with the US, and the on-going opposition protests against the sanctioning of ‘FDI in retail trade’, can be parallels. If any or many of them are to return to power at a future date, the political opposition in the country would be called upon to revisit their positions on such issues. Either they accept the ground realities as they existed at that time, or revise the government policy on issues of the kind. These are different from other charges of corruption, for these ones do not involve any complaints of fiscal wrong-doing or loss to the government, per se.

Unlike in India, on the airport deal in Maldives, policy issues, allegations of procedural violations, possibilities of other wrong-doing and loss to the government have all been aired already. Some of them, like the charge that the previous government had circumvented constitutional mandates and legal provisions in the process, or had not acted with care on the prioritisation of contractual conditions and obligations all relate to the domestic front. What they may have to deal with the foreign investor, India’s GMR in this case, are something flowing from the former, but are also independent of the same.

The current phase of the protests owe to President Waheed Hassan’s letter to all parties participating in his government for their views on the matter, for the government to put the inherited problem in the backburner to the mutual satisfaction of all stake-holders. At the end of the day, the airport deal is huge and unprecedented in procedural and financial terms for the country. There is also a need to evolve national consensus on issues and procedures in particular if a successor government has to uphold the national commitments made by a predecessor.

It should in context involve the opposition Maldivian Democratic Party (MDP) of predecessor Mohamed Nasheed at some stage, if ‘consensus-building’ has to make sense to the domestic constituencies and means commitment for the investor company from overseas, from whichever part of the world they come from. It was in the absence of such a consensus when the Nasheed government cleared the deal that the entire issue has been raked up all over again by a successor-government. ‘Due diligence’ became a possibly casualty to political expediency, all round.

The result is that the same agreement has come to be played out politically for a second time in as many years. Earlier, when the agreement was ready for signing, it brought together the divided opposition parties on the same firing-line against the government. They cited various violations of laws and procedures. The after-thought of a parliamentary legislation, directing prior legislative clearance for ‘transfer of national assets’ to private parties, led to the government of the day crying foul, and all 13 nominated members of the cabinet quitting in haste.

Today, when all those parties are in government together, the revival of the issue has threatened the government. One of the government partners, namely, the Dhivehi Rayaththunge Party (DRP) has argued that the government would not have the kind of monies required to pay back the contractor if the deal was rescinded. A few others have called for the ‘nationalisation’ of the airport while some have described it more clearly and carefully as ‘taking it back’. In the process, attributing motives to the DRP leadership and the questioning of their ‘nationalism’ have begun threatening the stability of the government.

That the inherent differences within the ruling coalition cannot but come out in the open once the common adversary in President Nasheed and his MDP had been neutralised was known even to a casual observer of coalition politics the world over. It is written into any coalition arrangement. In Maldives, it reflects a perception of lessening political challenge posed by the MDP, among the partners in the ruling alliance. Such perceptions and decisions based on such perceptions can come to trouble the alliance, just as a perception of a ‘social alliance’ that the MDP thought it had at its disposal when in power failed the party when and where it mattered.

Not different from tourism FDI

This is not the first time that Maldives is faced with policy issues pertaining to overseas’ investments. FDI has been at the centre of the resorts-driven tourism industry, which in turn continues to be the backbone of Maldivian economy over the past decades. The country is yet to find a substitute or a supplementary to the same. So dependent has the economy been on tourism that every global meltdown and every tsunami-like natural catastrophe has upset the Maldivian apple-cart, thankfully to revive in good time and through innovative approaches.

Yet, when the tourism economy evolved, the policy involved long-term lease of individual islands/islets for the foreign investor to build his resort, market it mostly to foreigners, and also repatriate his profits in dollars, and without going through the Maldivian banking system. There were no tabs or restrictions other than the payment of ‘bed tax’ on a pro rata basis to the Maldivian government. The policy has paid very rich dividends to the economy of Maldives, changed the face of the country and has inspired individual Maldivians to aspire for more.

The evolution and implementation of the nation’s tourism policy owed mainly to the presence of a strong and single leadership at the helm through those formative years of what should be acclaimed as the modern, Maldivian economic success story. President Maumoon Abdul Gayoom’s three-decade long rule also helped reach out modern education and healthcare across the atolls, but through the state system. The Gayoom regime adopted a combination of divergent economic policies that benefited the nation on the fiscal front and the people on the socio-economic front.

Through the Gayoom initiative, an imaginative mix of overboard globalisation in the South Asian region of the times at the level of revenue-generation and the socialistic pattern of distribution of the nation’s income made wonders. Neighbouring Sri Lanka was the closest (in terms of geography) and immediate (chronologically) neighbour to experiment with market capitalism. Yet, close to 35 years down the line, the results of the combination are mixed at best in Sri Lanka. In Maldives, however, it has been an unqualified success.

Under the Maldivian scheme, tourism industry, structured as a policy and product of the norms of market economy generated funds for the government to take the benefits of education and healthcare to the largest yet dispersed sections of a dis-spirited society. The benefits in terms of national growth and individual’s development have all occurred in front of the present-day generation, and they have relished and cherished them, too. It is the model that could be said to have been applied to the airport modernisation lease contract, too, though on details of procedure and benefits, there could be differences, both of concepts and of consequent opinions.

In a limited way at least, the airport development and long-lease of the existing reconstruction and accompanying reimbursement of the investment should thus be seen as an extension of the previous policy that the Nasheed government had inherited and explored for further exploitation for the medium and long-term benefits of the people at large. On a related issue, of course, the Nasheed government may have departed from the set norms and practices that did rise the hackles then as now. Included in the list was the decision to grant resort licenses in ‘inhabited islands’, interfering with local culture and also the Islamic tenets against sale and consumption of liquor.

‘Nationalism’ and ‘nationalism’

It is in this context a closer look needs to be given to the demands for the ‘nationalisation’ of the airport. For starters, INIA continues to be owned by the Maldivian State and Government, the GMR has been given only a long lease of the same. To demand ‘nationalisation’ would thus be a travesty of the truth, and challenges the nation’s inherent and inalienable right – which anyway has not been alienated. In a nation where the State owns all the land, such a construct could also hit at (though not at all in the legal sense) later claims for a return of the property to the State when due. If nothing else, it could create a mood of resignation, not just of reservation if only over decades, which in turn is at the heart of the current protests, instead.

GMR at no point in time is known to have demanded ownership of the airport, to begin with. It is thus clear that the State cannot nationalise what it already owns, and continues to own. Worse still, given the traditional meaning attaching to a terminology like ‘nationalisation’, street-demands for the same in the context of INIA could sent jitters down the spines of all those who have already invested hugely on the resort-islands, benefitting all stake-holders in the process.

Unless otherwise proscribed, what may apply to other lessees of islands should apply to whichever lessee of the airport islands, be – as long as it is for development against the payment of lease money and on prescribed conditions for a fixed period of time. The reverse should also be true the same way – what is sought to be applicable to the single largest investor in the nation’s history could be applied to lesser mortals without anyone being wiser of any unforeseeable situation when an agreement is signed or a situation is created, later.

It is not unlikely that there may still be a need for the Maldivian Government to revisit the lease-policies as a whole and applying the yardstick to the GMR deal too. Whether such changes could be specific to a particular project or agreement, or can have retrospective effect is a question that needs to be agitated in the context of the individuality or otherwise of individual agreements involved. However, responsibility needs to be restored to the national dialogue and clarity evolved through a consensus process, lest any foreign investor – existing one or a future one – would have doubts of his own on entry-exit terms and timelines.

Product of sweat and toil

All this does not preclude the present-day sentiments attaching to what has since been rechristened as INIA in the living generation of middle-aged Maldivians and above, particularly so those in Male. The airport was a product of their sweat and toil, and literally so. As students and youth in their growing-up years, they had contributed physical labour and whatever a poor nation could afford for the up-gradation of the airport in the mid-Seventies. Both sentimentally and politically, it had contributed in some ways to the Independence of the Maldivian protectorate from the British ‘Protector’. The airport is thus of a sentimental value to many grown-up in the country.

All this should not mean that the ‘sovereignty’ of the Maldivian state and the security of its territory should be reduced to be identified with the airport near-exclusively in parlour discussions, if not national discourses. If the argument is that the INIA is a tool for defending the sovereignty of the nation and its territorial integrity, there are other, smaller airports across the country, including those for the dozens of hovercraft dotting the lower skies, which are all vehicles of economic growth, not military-threat. So has been INIA, barring the one occasion, when the Indian Air Force (IAF) was called upon to defend the airport and the nation through it, from marauding mercenaries in 1988.

Yet in the new millennium for those who made the airport possible in the first place, and their younger generation to confuse ‘nationalism’ with ‘sovereignty’, raising arguments based on such perceptions would not help the nation, after a point. The spirit and phraseology are not inter-changeable, nor can they be inter-mingled in legal and commercial terms, either. Arguments thus based on non-existent linkages could make for good politics, but would not contribute to good policy. They have to be separated and addressed as individual aspects – but addressed they should be.

Despite a further expansion and growth of resort-tourism in the country, the limitations for the future are being systematically exposed. The Maldives does not have answers to the ever-increasing demands on the economy, whose expansionist pace is slowly coming to a grinding halt. With no scope for unlimited advent of manufacturing or even the services sector, as a money-spinner and/or forex-earner, the country would have to look at infrastructure as a source for attracting investments and creating the kind of jobs that the average Maldivian youth will be happy with, and paid for, in full measure.

Reviewing investment policy is one thing, but revisiting an individual contract is another. The two shall not meet – and the nation cannot afford it if the matter is allowed to drag on either. The alternative should be to learn from the mistakes, if any, and apply correctives where possible to the issues on hand – and also in revisiting the policy for the future. That alone would help.

Profitability, vulnerability

It is in this context investments from across the world have to be assessed for their overall profitability for the Maldivian people and economy, and the relative vulnerability that such arrangements could throw the nation into. In the current phase of the expansion of the Maldivian economy and growth, small-time investments in international/regional relevance would not suffice, as used to be the case for the funds requiring for putting up a resort or two. Either foreign governments or international agencies will have to put in the money, which will be in the form of repayable credit, even if at a low rate of interest and over the long term.

The alternative, which comes without any political or fiscal tag, over the medium and the long-term, is to encourage FDI, particularly in the infrastructure sector, where the foreign investors’ perceived propensity for political mischief over time would be minimal, as against their investments in the stock market, for instance. There are no repayment-tags attaching to such investments, but for the licensed fees, which however have to be negotiated with care and foresight.

Over time, the experiences of other nations have shown that investor-nations have often used their investments and repayments to muscle their political way in the host-nation, through the short, medium and long-terms. In their case, the repayment terms and schedules hang over the nations’ head like the Damocles’ Sword. Against this, overseas-investor has often been seen as a friend and advocate of the host-nation in his native land, in political, economic and security terms. The lessor-nation does not have to repay him with interest, with profligacy and bad-planning in the interim adding to the fiscal and economic vows of Governments as mightier nations have been over the past years.

In its place, a carefully-negotiated lease agreement provides for his recouping his investment-cost with interest over in a calibrated time-period. What may thus be required at the moment is re-negotiation of the INIA agreement on the one hand, and the need for the Maldivian government and legislature to fix certain loopholes that they might have found in their existing policies and procedures, possibly with the view to evolving a consensus approach, which had eluded the nation on this score in the past. Therein may lie the solution now to the Maldivian airport row, too – not elsewhere or otherwise!

The writer is a Senior Fellow at Observer Research Foundation.

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]

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ACC approaches Finance Committee over Nexbis system

The Anti-Corruption Commission (ACC) has told Parliament’s Finance Committee that the deal with Malaysian mobile security provider Nexbis will cost the Maldives MVR 2.5 billion (US$162 million) in potential lost revenue over the lifetime of the contract.

The border control system is now up and running at Ibrahim Nasir International Airport (INIA), after a Supreme Court ruling in early September favouring Nexbis ended almost two years of efforts by the ACC to block the project.

Under the ‘build operate and transfer’ (BOT) agreement with Nexbis, the government is obliged to pay Nexbis US$2 for every foreign passenger processed and US$15 for every work permit for the 20 year lifespan of the contract. Nexbis remains responsible for the upgrading, servicing and administration of the system.

Former Immigration Controller Abdulla Shahid has expressed concern over both the cost and necessity of the project, calculating that with continued growth in tourist numbers Nexbis would be earning US$200 million in revenue over the 20 year lifespan of the agreement.

At five percent, royalties to the government would come to US$10 million, Shahid said, when there was little reason for the government not be earning the revenue itself by operating a system given by a donor country.

“The option was there to establish the system for free,” stated ACC President Hassan Luthfee, revealing that the US government had offered a free system in 2009.

“Even the Indian government had offered to do it for free. On the other hand this could have been done for MVR2.3-2.5 million. So we can’t believe that this should be done at such a high cost,” Luthfee told the committee.

Other contentions raised by the ACC included a “questionable” project evaluation, which the commission alleged violated protocols of the National Planning Council.

“The National Planning Council’s protocols say that anything passed by the council cannot be changed by any other relevant institution unless it is sanctioned by the Council itself or the ministerial cabinet. But without following the said two protocols, Immigration made major changes to the proposal,” ACC’s investigation officer Mohamed Sodig was reported as saying in local media.

Evaluations and bid criteria had been unclear, the ACC alleged, further claiming that the validity of the Nexbis bid had been 90 days which had expired at the time the price bids were opened.

“We tried to determine whether the validity of the proposal or bid of Nexbis had been extended. However, we failed to find a single document that had done so, and marks had been given for Nexbis’ price bid,” Sodig was reported as stating.

The commission also claimed that minutes for one government meeting to discuss the project had taken place during prayer time on Friday October 15, 2010, which the commission claimed was “highly suspicious in a 100 percent Muslim country”.

The ACC also contended that the charging of a fee for passengers and foreign workers constituted a tax and was in violation of Article 97 of the constitution, requiring parliamentary approval for new or altered taxation. In an apparent precedent, a similar ruling from the Civil Court in late 2011 overruled airport developer GMR’s ability to levy an Airport Development Charge (ADC), despite this being stipulated in the developer’s concession agreement with the government.

The Supreme Court has meanwhile cleared the way for the border control project, invalidating an earlier injunction from the High Court.

The move prompted complaints from the ACC, which expressed concern and frustration over the decision stating that it has put the commission in a state of limbo and deprived it of purpose.

“If this institution is simply an investigative body, then there is no purpose for our presence,” he said. “Even the police investigate cases, don’t they? So it is more cost effective for this state to have only the police to investigate cases instead of the ACC,” Luthfee said at the time.

Outside the dispute over its legality, with the project now running the collection of biometric data by immigration allows the government to identify people without paper documents – useful in a country where a third the population are imported workers, and where the confiscation of passports by employers is common practice.

The reaction from tourists to the new system has however been mixed.

“The immigration process now takes a lot of time to complete because they must now take fingerprints and pictures of people entering the country,” observed a German visitor.

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Maldives over half-way towards one million visitor goal following August arrival growth

Arrival numbers to the Maldives between January and August this year totalled 614,802 people – an increase of 2.9 percent compared to the same period during 2011, official figures provided by the Ministry of Tourism, Arts and Culture have shown.

With Maldives travel authorities aiming to welcome a million visitors to the country by the end of the year, the figures highlight a 3.8 percent increase in arrivals for August 2012 when compared to the same period the previous year.  A total of 79,768 international arrivals were recorded coming to the country last month.

Although unavailable for comment today, Deputy Minister for Tourism, Arts and Culture Mohamed Maleeh Jamal told Minivan News earlier this month that the country’s travel industry was on target to meet its goal of attracting one million annual visitors – claiming the “the hard days” were over for Maldives tourism.

Maleeh claimed at the time that the industry remained on track to attract one million visitors, despite facing challenges such as the impact of ongoing financial uncertainty on some core European tourism markets like the UK and Italy.

According to the Tourism Ministry figures, for the first eight months of 2012, Europe continued to dominate visitor numbers to the Maldives, accounting for 55.7 percent of all arrivals – down 2.9 percent when compared to 2011.

During August, total European arrivals on a year-on-year basis fell by 9.6 percent to 35,488 visitors.

In Central and Eastern Europe, which includes markets like Russia, Poland and Bulgaria, visitors during August fell 7.7 percent compared to the same period in 2011.

In Northern Europe, which incorporates markets including the UK, Sweden and Ireland, arrivals dropped 14.3 percent to 8,202 last month, according to the official statistics.

Southern Europe also recorded a drop in arrivals with 7,710 visitors from markets such as Greece, Italy and Spain coming to the Maldives – a fall of 24.1 percent compared to the same period last year.

Arrivals were up by 5.6 percent from the Western Europe region on the back of growth in markets such as Germany, France and Austria, with 12,434 visitors entering the country during August 2012.

Europe’s smallest tourism market for the Maldives, Eastern Mediterranean Europe, saw 617 arrivals visitors coming from countries like Turkey and Israel, a fall of 7.9 percent.

The Asian impact

Asia was responsible for 38.5 percent of arrivals in the Maldives between January and August 2012, an increase of 9.1 percent over the same time last year.

Despite the overall decline in European visitors during August 2012 when compared to the same period last year, arrivals from the Asia Pacific market were up 12.6 percent to 38,898. The increase was reflected in increased visitors from key markets throughout the region.

North East Asia, which represents the bulk of the region’s travel market for the Maldives – with countries like China, Japan and Korea – saw arrivals increase by 9.4 percent to 31,020 people.

In South East Asia, visitors to the Maldives rose 45.1 percent during August 2012 to 2,809 from markets such as Indonesia, Thailand and Singapore.

South Asia meanwhile posted a 19.6 percent rise in visitors, with 3,623 arrivals from markets including India, Sri Lanka and Bangladesh being recorded for the month on a year-on-year basis. Arrivals from Oceania markets like Australia and New Zealand were up 18.1 percent to 1,446 people.

According to the same findings, arrivals from Africa reached 524, an increase of 24.5 percent, while visitors from the Americas rose 19.9 percent to 2,146. Arrivals from the Middle East during August rose 3.4 percent to 2,712 people.

Occupancy rates

Despite the growth in arrivals, the total occupancy rate for resorts, hotels, guest houses and safari boats during the first eight months of the year was down 1.2 percentage points in total to 70.8 percent. On a year-on-year basis, total average occupancy for August 2012 fell one percentage point to 68 percent.

According to Tourism Ministry statistics, the average resort occupancy between January and August this year fell 2.3 percentage points to 77 percent compared to the same period in 2011. During August alone, average occupancy fell 0.8 percentage points to 74.9 percent.

At the country’s hotels, average occupancy for the first eight months of the year was down 8.8 percentage points to 30.3 percent. In August, average hotel occupancy was down 6.1 percentage points to 25.8 percent over the same time frame last year.

Guest house occupancy for the first eight months of 2012, rose 0.8 percentage points to 16.3 percent. The same level of growth was also recorded in terms of average guest house occupancy for August 2012, which rose 0.8 percentage points to 16.3 percent.

Safari vessel occupancy meanwhile increased 4.1 percentage points between January to August 2012, totalling an average of 28.4 percent. However, average occupancy during August had fallen two percentage points to 19.1 percent.

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“Time for everyone to tighten their belts”: Finance Minister Jihad

Minister of Finance and Treasury Abdulla Jihad has said the state must brace to enact austerity measures in the long-term if authorities are to address the country’s fiscal deficit – with further budget cuts anticipated in all government departments over the next 12 months.

Jihad has told Minivan News that previous commitments by government institutions to cut their budgets by 15 percent would need to be followed by further reductions to state and civil service spending in next year’s budget, regardless of financial assistance secured from China and India.

The minister’s comments were made as Parliament’s Finance Committee – reconvening for the first time since July – agreed this week to provide an additional MVR 12 million (US$780,000) in budget to the Auditor General’s (AG’s) Office, according to local media.

Auditor General Niyaz Ibrahim said that under the existing state budget, an agreement was reached that an additional MVR 58.8 million (US$3.8 million) would be provided to the AG’s Office, though it was decided to request a smaller proportion of these funds, the Sun Online news service reported.

People’s Aliance (PA) party MP and Finance Committee Chair Ahmed Nazim was not responding to calls from Minivan News at the time of press.

However, Jihad claimed that the decision to provide the extended budget was a “concern” considering the state was not getting enough direct revenue at present to justify its spending.

“We need to be fair when it comes to the budget, everyone should have to follow the same rules,” he claimed. “Otherwise this would mean that I could only reduce the budget of the Finance Ministry in future. It is time that everyone should tighten their belts.”

According to Jihad, provisions for the extension of funds to the AG’s Office had been included in the state budget, but he claimed that the country needed to work together in reducing state spending where possible.

Regarding claims that further cuts to the state budget wuld be required during the next 12 months, Chairman of the Civil Service Commission (CSC) Mohamed Fahmy Hassan said that it had “managed” with the 15 percent cuts already made to its expenditure.

Fahmy added that as no request had so far been made by the government to reduce the size and budget of civil society organisations, it did not have concerns about potential job cuts.

“Our mandate is to provide human resources to the government. As long as there is no effect on the salaries or number of civil servants, we will not seek to intervene in the policy of government,” he said.

With state income lower and expenditure higher than predicted, this year’s budget deficit had been forecast to reach MVR9.1billion (US$590 million), equivalent to around 28 percent of nominal GDP.

Financial assistance

In the last few months, authorities in India and China had both pledged to provide financing to the Maldives. Finance Minister Jihad said that of these funds, US$25 million being provided by India would be put into “budget support” to try and address state spending. A large amount of the funding meanwhile from China, which would total US$500 million, was expected to be put towards development projects such as housing construction, the Finance Ministry added.

The Indian government had announced that it would be granting the Maldives an additional as part of the US$100 million standby credit facility agreed last year under the previous government.

China has also pledged funding to the government of President Dr Mohamed Waheed Hassan following an official state visit to the country.

The loans, equal to nearly one quarter of the Maldives’ GDP, are said to include $150 million (MVR2.3billion) for housing and infrastructure, with another $350million (MVR5.4billion) from the Export-Import Bank of China, reported Reuters.

Jihad has maintained that the state still needs to reassess where further spending cuts can be made going forward.

Just last month, the Finance Ministry forwarded proposals it claimed would cut MVR2.2billion (US$143million) form the national budget.

The austerity measures include raising Tourism Goods and Services Tax (TGST) to 15 percent,  terminating electricity subsidies in Male’, increasing import duties on alcohol and imposing a 3 percent  duty on oil, “reforming” the Aasandha health insurance scheme, and reducing the budget of every Ministry and independent institution by 15 percent – among other measures.

The original budget for 2012 envisioned that revenue would rise to MVR11.4billion (US$740million) with expenditure anticipated to be MVR14.5 billion (US$941million). This would have resulted in a budget deficit of around MVR3billion (US$194million), representing 10 percent of GDP.

However, several resort managers voiced concern at the time that the proposed revenue amendments would serve only to  affect the financial viability of the country’s tourism industry, while providing little improvement in service or support in return.

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GMR leadership to visit Maldives as government parties escalate nationalisation rhetoric

Board members and the head of Indian infrastructure giant GMR, G M Rao, are due to visit the Maldives later this week in a bid to resolve tensions with the government over the company’s development of Ibrahim Nasir International Airport (INIA).

The upcoming visit follows a meeting between Rao and former President Maumoon Abdul Gayoom at a hospital in India where Gayoom’s wife was being treated. Gayoom also recently met with Indian Prime Minister Manmohan Singh.

GMR won a 25 year concession agreement to develop and manage the airport during the Nasheed administration. The opposition at the time challenged the government’s privatisation and threatened to renationalise the airport should it come to power.

Following the controversial transfer of power on February 7, the unity government under President Dr Mohamed Waheed Hassan has swung between issuing reassurances within diplomatic circles that Indian investments in the country would be protected, while locally stepping up nationalisation rhetoric.

Some of the dissent has blurred the line between business and politics.

Leader of the government-aligned Jumhooree Party (JP), resort tycoon Gasim Ibrahim, urged the government in local media to reclaim the airport, even at a cost of US$700 million, as it was worth “a thousand times more”.

Gasim’s comments followed GMR’s decision to suspend the credit facility for his Villa Air airline, due to unpaid bills totaling MVR 17 million (US$1.1 million) for fuel, ground handling and passenger service fees.

Contentious airport development charge

One of the government’s disagreements with GMR concerns the charging of a US$25 Airport Development Charge (ADC) on outgoing passengers, as stipulated in the concession agreement.

During the last months of the Nasheed administration, the opposition Dhivehi Qaumee Party (DQP) filed a successful case in the Civil Court blocking this fee from being charged on the grounds that was effectively a tax which had not been approved by parliament. DQP leader Dr Hassan Saeed, now President Waheed’s special advisor, and DQP Vice-President Dr Mohamed Jameel – the new Home Minister – justified their disapprobation while in opposition by publishing a pamphlet in Dhivehi (English translation).

The pamphlet described the deal as “paving the way for the enslavement of Maldivians in our beloved land”, and warning that “Indian people are especially devious”.

To abide by the court decision, Nasheed’s government agreed to subtract the ADC from its concession revenue while it sought to appeal.

Following February 7 the opposition inherited that  compromise and in the first quarter of 2012 received only US$525,355 of an anticipated US$8.7 million.

With no resolution, in the second quarter of 2012 the government was presented with a bill for US$1.5 million, due to a shortfall in airport income. The loss of revenue comes at a time when the country is facing a crippling budget deficit, a foreign currency shortage, plummeting investor confidence, spiraling expenditure, and a drop off in foreign aid.

GMR publicly offered to resolve the ADC dispute by exempting Maldivian nationals from paying the fee, but has otherwise kept its negotiations largely behind closed doors.

In a statement at the time, GMR noted that the government received US$33 million in 2011 from airport concession fees, “three times the money the government ever made in a year [from the airport] before privatisation.”

Following construction of the new terminal in 2015 – including “a state-of-the-art 600,000 square foot integrated Passenger Terminal and a 20,000 square foot VIP terminal, and various other airside and landside developments,” expected revenue from the airport to the government was expected to reach US$50 million per year, GMR observed, and almost US$100 million from 2021 as passenger numbers increased.

“In effect, GMR Male’ International Airport Limited’s contribution to the government would be over US$2 billion over the concession period of 25 years, which will make a very significant contribution to the economy of the Maldives.”

The government’s airport company, Maldives Airports Company Limited (MACL), complained that it was now facing bankruptcy as a result of the ADC deduction, and insisted that it could make MVR 60 billion (US$3.9 billion) over 25 years by developing and operating the airport on its own. It did not clarify where the investment would come from.

If the government considered GMR’s public offer, it made no sign. Instead, the Transport Minister backed MACL in ordering GMR to pay back the money deducted.

MACL Managing Director Mohamed Ibrahim had told local media that MACL’s agreement with GMR under the previous government to deduct the ADC payment was “null and void”.  He told reporters that the deal was no longer relevant as it had been agreed by the former MACL chairman, who had been replaced under the new government.  Ibrahim contended that charges could therefore no longer be deducted from GMR’s concession payment.

“We had informed [GMR] that the letter from the former Chairman of MACL was now invalid and hence must not be followed. In addition we had also informed that no deductions can be made from the concession fee,” he told local newspaper Haveeru.

The matter has now been sent to the Singapore court of arbitration, as per the concession agreement.

Escalation

The stand-off escalated in early August following a stop work order on the new terminal development, after the government alleged there were missing planning permissions from the Civil Aviation Authority.

“When the government decides that a project be stopped, we will make sure this happens,” said President’s Office Spokesperson Abbas Adil Riza at the time. “GMR have not discussed the construction with relevant authorities,” he claimed.

In the past week the government and assortment of former opposition parties now in power have stepped up their campaign to pressure the airport developer, with cabinet ministers holding a press conference during which they accused the World Bank’s International Finance Corporation (IFC) of “negligence” and “irresponsibility” in conducting the original bidding process.

The IFC dismissed the allegations: “The IFC’s advice complied with Maldivian laws and regulations and followed international best practices at each step of the bidding process to ensure the highest degree of competitiveness, transparency and credibility of the process,” the organisation stated.

Attorney General Azima Shukoor then announced she had asked the Supreme Court to rule on whether it had jurisdiction over the airport agreement.

“It is against the International laws and the United Nations Charter that any action that undermines any sovereign right of a sovereign state, it is clear that courts of a sovereign nation has the jurisdiction to look into any matter that takes place within the boundaries of that state as according to the constitution and laws of that state,” read a statement from the court.

“Even though a contract has an arbitration clause giving right to arbitrate in a foreign court does not limit a local courts jurisdiction to look into the formed contract, and it is clear that such limitations are in violation of UN Charters principles of sovereign equality, principle of sovereignty non intervention within domestic jurisdiction, principle of self determination rights,” the Supreme Court said, in an apparent affirmative.

Investor confidence

Meanwhile, the government-aligned Dhivehi Rayithunge Party (DRP) this week revealed President Waheed’s response to its letter requesting details of the implications of exiting the concession agreement with GMR – an apparent fee of US$700 million, although Minivan News understands that even if the government were to produce the money, under the concession agreement it would also be required to prove ‘public interest’ in the Singapore court of arbitration.

According to the DRP, President Waheed advised that it would be “extremely difficult” to make the payment given the country’s economic circumstances, and that cancelling the agreement would furthermore have a negative impact both on perception of the Maldives as a favourable destination for foreign investors, and Maldives-India relations.  Dr Waheed emphasised that the decision was ultimately one for the political parties in the unity government.

The following day, DRP MP Ali Azim called on President Waheed to resign, claiming that it was up to him to reach a decision.

“If Waheed is finding it too hard to come to a decision on the matter of GMR, he ought to resign immediately,” Azim told local media.

“Each of these parties have someone who is looking forward to running in the 2013 elections. Whether it be Gasim, Yameen or Thasmeen, they are all just waiting for 2013 to come around. Now if Waheed’s going to ask these men for advice, then he’s going to get tricked, isn’t he?” predicted the MP.

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Bahraini company interested in Cable & Wireless’ Dhiraagu shares

Dhiraagu’s leading shareholder, Cable and Wireless Communications (CWC), has received an offer from a Bahraini company regarding its Monaco & Islands business unit.

This section of the multinational’s portfolio – one of four regional units – consists of Monaco, the Maldives, the Channel Islands, the Isle of Man, the Indian and Atlantic Oceans, and Africa.

The company has released a press statement confirming the approach.

“Cable & Wireless Communications Plc today confirms that it has received an approach from Batelco Group regarding a possible transaction involving its Monaco & Islands business unit,” read the statement.

“At this point, there can be no certainty that the discussions will lead to a transaction,” it added.

CWC took a controlling stake in Dhiraagu, the Maldives’ largest telecommunications company in 2009 when former President Nasheed’s government sold 7 percent of its shares, giving the British-based firm a controlling stake in the company.

Then-opposition parties criticised the sale, arguing that the acquisition of large stakes of domestic companies by foreign investors was bad for the country.

Similar arguments have been levelled against the development of Ibrahim Nasir International Airport (INIA) by Indian company GMR, sparking fears that foreign firms will be deterred from investing in the Maldives.

CWC now controls 52 percent of Dhiraagu’s shares,with the government holding just under 42 percent as of March this year.

Dhiraagu is currently the largest company on the Maldives Stock Exchange (MASEX) by market capitalisation after listing in January this year.

CWC’s 2011/12 financial report showed that it made $586million in pre-tax revenue from it ‘Monaco & Islands’ interests – 83 percent of this pre-tax revenue came from the company’s interests in Monaco, the Maldives and Guernsey.

The report mentioned that, despite strong growth which saw the Maldivian Rufiyya (MVR) revenue increase by 3 percent, the free float of the currency resulted in a 14 percent loss compared with the previous year’s US Dollar (USD) revenue.

The April 2011 decision to allow the MVR to be traded within 20 percent of the pegged rate of MVR12.85 to the USD effectively devalued the currency as the exchange rate rose quickly to MVR15.42 to the USD without moving since.

Praised by the International Monetary Fund (IMF) as “an important move toward restoring external sustainability,” although some local experts described the decision as “high risk” and “unpredictable”.

“CWC has long been seen by analysts as wanting to sell its island assets, as well as its unit in Macau, given its longer term strategy of focusing on its core business in the Caribbean,” said Britain’s Financial Times .

Batelco (Bahrain Telecommunications Company) operates in Jordan, Kuwait, Saudi Arabia, Yemen, Egypt and India, as well as its home market.

The Financial Times reported that the company was seeking to expand its foreign investments after its domestic subscribers and profitability had dipped, citing stiff local competition.

“Bahraini companies have suffered amid political unrest in the Gulf state that led to widespread protests and a security crackdown,” the paper added.

The company’s shares on the Bahrain Bourse have fallen nearly 13 percent so far this quarter.

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IFC responds to government’s allegations of negligence in airport bid

Additional reporting by Neil Merrett

A spokesperson for the International Finance Corporation (IFC) has defended the organisation against charges of negligence during the bidding process for the development of Ibrahim Nasir International Airport (INIA).

In a press conference last Thursday held by the Attorney General  Azima Shukoor, Economic Development Minister Ahmed Mohamed, Toursim Minister Ahmed Adheeb and Civil Aviations Minister Dr Ahmed Shamheed, it was alleged there were discrepancies in the bid awarding and concession process.

The cabinet members claimed that the IFC had been “irresponsible” and “negligent” in advising the former government of President Mohamed Nasheed in the concession of INIA by Indian infrastructure giant GMR.

“The current government believes that the IFC had not given the most appropriate legal, financial and economic advice to the Maldivian State,” Azima Shukoor said.

The IFC denied the accusations, stating that its advice was geared towards achieving the “objective of upgrading the airport and ensuring compliance with applicable international regulations” and providing the Maldives government “with the maximum possible revenue”.

“A competitive tender was organised with the objective of selecting a world-class, experienced airport operator, who would rehabilitate, develop, operate and maintain the airport,” said an IFC spoksperson.

The IFC – a member of the World Bank Group – was established in 1956 to stimulate private investment in developing countries through investment, advisory, and asset management services.

The spokesperson stated that the bids were evaluated by a government appointed committee, comprising senior government officials, using two key criteria.

The first criterion required firms to meet all the technical requirements set out in the tender documents which, Seth stated, were designed to meet the objectives of the government, and ensure the airport becomes a world class airport with ‘Leadership in Energy and Environmental Design’ certification (Silver).

The second criterion was financial, favouring the highest offer from firms that passed the technical stage. The financial criterion was a combination of a one-time up-front fee, and fixed and variable fees to be paid throughout, explained the spokesperson.

“The IFC’s advice complied with Maldivian laws and regulations and followed international best practices at each step of the bidding process to ensure the highest degree of competitiveness, transparency and credibility of the process,” the organisation stated.

“These processes have been followed globally in several Public-Private-Partnership projects in the airport and other infrastructure sectors,” it added.

Asked if the IFC was currently continuing assistance to GMR or the Maldivian government, it replied “We are currently not working in any capacity with the authorities on this project. We however remain available to address any issues or concerns that the government may have relating to the project.”

A GMR Spokesperson said that the company did not wish to comment on the remarks made by government ministers.

The Anti-Corruption Commission (ACC), which is currently investigating the GMR deal, said last week that continued work on the project may be delayed considerably whilst the investigations are completed.

ACC investigations began in June, although building work on the new terminal – due to open in July 2014 – was ordered to halt in early August after the government claimed that the company had not acquired the appropriate permits.

Government’s critique of bidding process

During Thursday’s press conference, Shukoor claimed that the role played by the IFC during the bid awarding process – as well as the technical, financial and legal advice given – was unacceptable and included “major inconsistencies” in the “loss-benefit assessment” carried out before awarding the project to GMR.

“The legal agreement also lacks equity between the state and GMR, and gives significant powers which have narrowed the government’s ability to manoeuvre within the agreement. For this reason, the state is facing a huge loss even in taking steps that have to be taken immediately,” she added.

Speaking about the prospective profit, Shukoor claimed the agreement made between GMR and the government would lose the country more than that it would earn, and a much more cost effective master plan had been made during the tenure of former President Maumoon Abdul Gayoom.

She said that as long as the agreement between GMR and the government is not invalidated, the agreement would be “legally binding” despite a “majority of the people” who wish to “terminate the agreement immediately”.

“The government must also consider how much money has to be paid back as compensation if terminating the agreement, and it is clear to all of you that the Maldives financial and economic situation is at a critical level, and in this situation it is not an easy thing to do,” she told the press.

Shukoor also expressed the government’s concern about the effect on investor confidence that may result if the agreement is terminated in addition to other “diplomatic issues” that may arise from such a decision.

The Economic Minister, Ahmed Mohamed, claimed that the Nasheed government had only considered the lump sum that it received as the upfront payment, rather than long term benefits that the government could have achieved.

“They awarded the bid to a party who proposed to pay US$76million, but if you look at the other bidders, their bids were more profitable in the long run. For example one of the bidders proposed to give a 31 percent share to all the businesses except that from oil trades until 2014, but GMR proposed only one percent,” he claimed.

He added that another bidder had proposed to share 16 percent of the profits gained from the oil trades with the government.

“It is clear that the government did not consider, when awarding the bid, the long term benefits of the people but rather an instant short term profit,” he argued.

Highlighting the already much disputed issue of the Airport Development Charge (ADC), Mohamed claimed the government had given up a lot of power to GMR in the contract, allowing them to dictate all the fees during the concession.

He stated that there were only two options left for the government: “Either find a solution within the concession agreement with GMR or terminate it.”

Civil Aviation Minister Dr Shamheed said the initial INIA master plan, made by British consultancy firm Scott Wilson, was considered too costly by the IFC.

“So we checked the truth of IFC’s report. The master plan by Scott Wilson is a phase based development. There were developments that were to be brought in the first phase, the second and other phases that followed were mentioned very much in detail,” he claimed.

Shamheed claimed that despite the fact that Wilson’s master plan was more cost effective the IFC made a new master plan, hiring another foreign Consultancy firm – Halcrow- which Dr Shamheed claimed was more costly.

“Scott Wilson’s phase one cost us US$390 million, and all the three phases summed up came to a figure around US$590 million. IFC did not provide this information to the government. We are talking about a development of 30 years,” he said.

Shamheed also alleged that the new master plan was made without even testing the status of the current runway at all and said they relied on a test that was made a long time ago.

“Even those tests showed that the runway needed significant repairs and some parts of the runway had to be removed,” he added.

“This is very irresponsible that the former government entered into a contract with a party who did not assess the situation of the existing runway,” he claimed.

Tourism Minister Ahmed Adheeb alleged that because of the new fees implemented by GMR following its take-over, the flight frequency from Europe had declined.

“Coming to Maldives is no longer feasible for most of the chartered flights.  Sri Lankan airlines’ Male to London direct flights have been pulled out following the decision. Even though the flight frequency from China has increased, the number of bed nights has declined,” Adheeb said.

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Hospitality expo head claims record exhibitor numbers defy impact of Maldives “unrest”

The 2012 Hotel Asia Exhibition and International Culinary Challenge is said to be at maximum capacity in terms of exhibitors this year – a trend organisers have claimed defies the negative impact to the industry of unrest in the Maldives during the last six months.

Husnie Rauf, Senior Manager of Maldives Exhibition and Conference Services (MECS), said the company had been “surprised” by the interest shown from exhibitors taking part in the show, which attempts to link the country’s secluded resort industry and local hotel trade with “world class” suppliers. Over the last decade, the exhibition has also held a culinary challenge that sees representatives from the resorts of the Maldives and neighbouring Sri Lanka competing in cuisine challenges, Rauf added.

“With all the political uncertainty this year, we have been surprised that we have a full house, we have even had to reject some applications from exhibitors and contestants for the culinary challenge,” he said.

“We have grown this year to be the country’s biggest ever exhibition with over 150 companies exhibiting at present.  These companies represent groups some 40 to 50 different countries. Right, now we are at capacity and cannot handle any more attendees.”

The three day-exhibition, which concludes today at Male’s Dharubaaruge conference centre,  aims to provide a diverse range of good and services; from fine foods and drink, to boating supplies and renewable energy technology.

Amongst the attendees was Desmond James, Director of Indonesia-based Hospitality Essentials, a supplier of hotel accessories such as soap dishes, dispensers and waste bins that he says presently works with between 30 to 40 of the country’s resorts.

James, who has attended the exhibition in the Maldives for several years, told Minivan News the expo remained a good opportunity for doing business in the country, as well establishing new contacts in the market.

However, he questioned whether claims from the event organisers about record exhibitor numbers reflected actual growth in the number of individual participants.

“I would say claims about a record number of exhibitors here could be a bit misleading, I think what you have are a number of larger booths, which perhaps take up the space that would be used by several exhibitors,” he said. “It is a good show, one of two that we participate in the Maldives along with the MHTE [Maldives Hotel and Trade Exhibition] event,” he said.

Having built a network of contacts in the country over the last five years, James said the expo, in reflection of the continued growth of the Maldives island resort model, did provide real opportunities to expand business.

“Our operations here are based on a combination of established contacts and meeting new companies. There are always new projects happening here and it is also a good way to catch up with familiar faces,” he added.

James claimed that for this year’ show, heavy rain in the Male’ area during the event’s first day negatively impacted the number of visitors, but added that improved weather conditions yesterday helped a much better turnout.

However, he stressed that the event itself continued to retain a strong focus on food products and services rather than the wider supply chain. James believed that such a focus limited some of the potential value for resort operators and key local industry players in attending the show.

Elsewhere on the convention centre’s first floor, alongside Sri Lankan real estate specialists, beverage groups and major multi-nationals like ingredients manufacturer Barry Callebaut, was a stand specialising in renewable energy technologies.

Over the last few years, successive governments in the Maldives have pledged to try and develop a more sustainable economy for the Maldives – commitments that have also been adopted by some resort groups to play up their eco-credentials.

Guy Sizer, who represents a group called South West Windpower at the show, concurred that the expo was something of an “unusual” event for a specialised energy-focused tech company to be taking part in considering the seemingly large focus on food and beverages.

However, Sizer added that for local partners based in and around the Maldives, the show over the last few years had remained “pretty useful” in order to build contacts with the local resort industry and discuss adoption of renewable technologies.

“There is certainly interest it seems in the local population regarding renewable energy, particularly as fears grow over the cost and reliance on diesel here,” he said.

Sizer said that from a Maldives perspective, there had been a great deal of interest in alternative energy supply from local people, however he added these ambitions had not always been backed up with investment.

“There is a strong correlation with what is going on in the Maldives in terms of renewable energy developments and what is going on in nearby massive economies like India, which has been experiencing energy shortages,” he said. “There is interest here even in the local population for renewable energy schemes, and we have some work ongoing here to that end. But as far as direct results go, we think that there stills needs to be a practical reference site here in the Maldives to show the applications of renewable energy technologies.”

In terms of business at the expo, Sizer said that several resort groups had been in contact over the last few days to discuss the possibilities of adopting renewable energy services such as off-grid wind technology.

As well as a potential hub for renewable energy development, the Maldives has continued to push its reputation as a high-end luxury destination.  As a result, the sourcing of goods like European cheeses, meats and other delicatessen specialities were well represented at the event.

One such supplier of these products is Deli United, which has combined a stand providing guests with fresh fruits from across the wider South Asian region, with matured Swiss cheeses and fine slices of meats usually experienced at the country’s resort properties rather than exhibit halls.

Whilst providing guests and exhibitors with combinations of fine cuts of deer with varieties of European cheeses, a company representative explained that the Maldives provided a unique market for high-quality foodstuffs.

“The market we are aiming for here in mainly the resorts, we have interest from local people, but in general they do not have the traditions of enjoying these sort of cheeses,” the representative said. “This is a very strong market, visitors spend a lot of money on food. With the products I have, I like to think of myself as something of a food missionary when it comes to my produce.”

Despite targeting the country’s resort industry, which was not subject to the same restrictions the country’s inhabited islands were in terms of banning the sale of alcohol and pork products, the company representative said he had tried to select a wide number of products like beef ham and duck pates for guests to sample at the event.

Beyond specialist products like cheeses, pate’s and meats, Kapila De Silva, Marketing Manager for Sri Lanka-based Sadaharitha Agri Farms and Exporters, said the Maldives also presented a strong market for more everyday items like fresh fruits and vegetables, considering the country’s limited food production output.

“Obviously you have a very luxury-focused market here, so of course, resorts will be expected to provide very high-quality fruits and vegetables to guests,” he said. “They expect the best-quality goods.”

Having attended the Hotel Asia Exhibition for the last few years, Kapila claimed that his company now worked with a growing number of resorts to provide a range of produce from more standards fruits and vegetables to specially developed products like square melons, which he added could also be embossed for individual properties.

“Our plantations in Sri Lanka allow us to provide a large amount of fresh produce,” he said. “Being so close to the Maldives,the country represents a very important market for us, with our low, medium range and higher altitude plantations, we really can supply a very large number of products.”

While Kapila claimed that recent political uncertainty had not seemed to dampen demand from the Maldives for fresh produce, he claimed that the company still faced challenges in supplying goods to the country.

“There are still some barriers here in the Maldives in terms of logistics. Basically we need to clear customs and have our products get out to the resorts as soon as possible.  At times this process can take up to seven or eight hours to have them processed.  This threatens the quality of our goods,” he said. “We would like to see more work conducted here in terms of logistical support as a number of resorts are not close by to the airport. Guests expect the highest quality products here in the Maldives, this includes fresh fruit and vegetables.”

Culinary challenge

The exhibition’s organisers added that beyond business relationships, equally important to the development of the Hotel Asia expo during the last ten years had been the culinary challenge, which is held alongside the trade show in the Male’ convention centre.

An estimated 35 chefs are taking place in this year’s event, which is divided into a number of categories to contest three main awards including ‘Best Culinary establishment’, ‘Top Maldivian Chef’ and ‘Most Outstanding Chef’.

Bruce Woolner, Operations Manager for Chef Middle East, a supplier working with a number of the country’s resorts, contended that the strong focus on food at the show -particularly through the culinary competition – was important for the ongoing development of the industry locally.

“It’s a very good way of engaging companies to take part, but also it’s way to positively talk up the industry in this country and that is something that is not done enough,” he said.

Husnie Rauf agreed that the competition was an important part of attracting the local and multinational resort operators to the event, with many locally-based chefs travelling to Male’ specifically for the event.

From the perspective of MECS, Rauf claimed that Hotel Asia continued to be the largest event of its kind for business in the Maldives.

But what prospects are there in the future for other major events?

Rauf added that after launching the Hotel Asia show back in 2000, a number of additional exhibitions targeting the local business community had been started up in the country.  These included a boat show that had been run by MECS up until 2008.

“We got to a point where there wasn’t a lot of investment in boats at the time due to a global economic downturn. We also used to run a construction-themed event in the country, but this hasn’t been held since 2009 again because of the economic climate,” he said.

“Right now we continue to manage the Hotel Asia exhibition and our education fairs. There continues to be strong interest for these services in the Maldives, particularly among Maldivians looking to study abroad.”

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Progress on GMR project awaits ACC investigations

President of the Anti Corruption Commission (ACC) Hassan Luthfee has said there may be an extended delay before work is resumed on GMR’s development of Ibrahim Nasir International Airport (INIA).

“It will take some time. It is not easy for us to finish it,” said Luthfee.

CEO of GMR Maldives Andrew Harrison last week said that no work had been completed on the site since August 2.

Work was initially halted due to issues relating to missing permits – an issue which Harrison said had now been resolved.

Luthfee said today that the government was now waiting for the ACC to finish its three cases concerning the Indian infrastructure company’s deal which was signed under the presidency of Mohamed Nasheed in 2010.

At US$511 million deal represents the largest foreign investment deal in the country’s history.

Luthfee refuted local media reports that two of the three cases will be completed by this Saturday.

“We have started the investigations and analysed the agreements and maybe we will finish our first reports in two weeks,” said Luthfee.

Luthfee was also keen to correct media reports that the ACC had requested a foreign expert to help specifically with the GMR investigations.

He stated that the ACC had been seeking an expert for assistance with all of the commission’s work but had struggled to accommodate one within the current budget.

Luthfee also added that the investigation would be conducted in conjunction with the Auditor General (AG) in order to give the process “greater transparency.”

Following a Supreme Court ruling on a separate case last week, Luthfee argued that the ACC was powerless without greater powers to prevent corruption.

“In other countries, Anti Corruption Commissions have the powers of investigation, prevention and creating awareness. If an institution responsible for fighting corruption does not have these powers then it is useless,” he said.

President’s Spokesman Abbas Adil Riza, who was not responding to calls at time of press, told local media yesterday that the government would not be able to take any decision regarding the GMR project until the ACC’s investigations were completed.

“ACC’s decision on the issue is very important for the government; it would assist the government in resolving this issue. There’s no legal action the government can take otherwise,” Abbas told Sun Online.

In June, pro-government parties re-affirmed a joint 2010 agreement calling for nationalisation of the airport.

The leader of one of these parties, Gasim Ibrahim of the Jumhooree Party (JP), was quoted in local media yesterday as saying he would oppose the GMR deal for as long as he lived.

These comments closely followed media reports that GMR had terminated the credit facility of Gasim’s Villa Air company after it had amassed MVR 17 million ($US1.1million) in unpaid bills.

There was no one from Villa Air available for comment at the time of press.

Fellow national unity government party, the Dhivehi Qaumee Party (DQP), filed a case last November against the introduction of an Airport Development Charge (ADC) which had been key to financing the project.

The DQP also produced a document criticising the deal and drawing parallels between foreign investment and colonialism.

After the Civil Court ruled the ADC an illegal tax, the Nasheed government reached an interim arrangement whereby GMR would deduct the lost revenue from the concessionary payments owed to the government.

This issue has become a major point of friction with the new government which subsequently declared this interim arrangement illegal also.

Transport Minister Dr Ahmed Shamheed, also not responding to calls today, met with India’s Civil Aviation Minister last week, informing him of the issues with the GMR project.

“The Civil Aviation Minister talked about this issue in detail, while we were on the subject of foreign investments. Until now, the Indian government had been aware only that the Maldivian government has an agreement with GMR. So we took the opportunity to explain the problems associated with this agreement. It was a good chance to inform them of this,” Shamheed told Sun Online.

Whilst Shamheed visited India, President Dr Mohamed Waheed Hassan, was in China where as well as meeting with prominent businessmen, he told the China-Eurasia Economy Development and Cooperation Forum that the Maldives was “open for business”.

The government recently sent a statement to the Commonwealth Ministerial Action Group (CMAG), arguing that the stigma of being on the group’s investigative agenda was deterring foreign investment in the country.

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