Category: Business & Tourism

Maldives business news

STO withdraws US$1.2 million case against DQP MP Riyaz Rasheed’s Meridian Services

The government-owned State Trading Organisation (STO) yesterday withdrew a case worth more than a million US dollars lodged against Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed’s Meridian Services Private limited.

The case concerned an unpaid sum of money worth Rf 19,333,671.20 (US$1,253,804.88), regarding Meridian’s use of the STO’s credit facilities.

Civil Court Judge Abdulla Jameel Moosa ruled that the case was dismissed, in response to a letter sent by the STO requesting the case be withdrawn.

Judge Moosa in his verdict stated that the court had received a letter from the STO requesting the court withdraw the case.

The letter noted that there were decisions to be made by the STO’s board of directors, and that after the “change in government”, the board did not have a sufficient number of members left to meet quorum and hold a board meeting. Therefore, the board was unable to make the required decisions, the organisation stated.

The sum of money the STO sought from Meridian Services included a sum of Rf 18,949,473.20 (US$ 1,228,889.31) for the use of STO credit facilities in payment for fuel oil, and a sum of Rf 384,198 (US$ 24,915.56) as a fine for the failure to make the payments on the date agreed in the contract made between the companies.

Initially, STO and Meridian Services made an oil trade agreement on 31 March 2010, which gave Meridian Services a credit facility worth 20 million rufiyaa (US$ 1,297,016.86) for purchasing oil from STO, and that payments had to be made within a period of 40 days.

However, in August 2010, STO lowered its credit limit from Rf20 million to Rf10 million (US$648,508.43) and shortened the payment period from 40 to 30 days.

Meridian Services sued the STO for breach of contract claiming that STO had brought in the changes to the credit facilities without giving the required notice of one month, in the event that the STO decided to change the credit facility with regard to a policy change.

However, Meridian Services lost the case after Civil Court Judge Abdulla Jameel Moosa ruled in favor of STO, stating that the STO had not breached the contractual terms agreed between the parties and that the documents the STO had submitted to the court was evident that it had brought the changes in proper compliance with the agreement.

Speaking to Minivan News, former legal director of President’s Office and lawyer Hisaan Hussain questioned whether such a big case could be withdrawn without even a board resolution.

“We are not speaking of an ordinary company. This is a public company and its making such a decision without a board resolution is a huge concern,” she said.

“STO has public share holders; they have to be answerable to the share holders,” she said.

The STO is a major supplier of general goods and pharmaceuticals to the Maldives, as well as fuel. It also supplies aviation fuel to Ibrahim Nasir International Airport (INIA).

“Political Motive”

MP Riyaz Rasheed was a very vocal critic of Nasheed during his tenure as president. He at the time alleged that Nasheed’s government had attempted to ruin his business, and when the STO had initially reduced the credit facilities in August 2010, his business suffered significant losses and forced him to fire several employees.

Riyaz was not responding to calls at time of press.

With regard to the case, Maldivian Democratic Party (MDP) Spokesperson MP Imthiyaz Fahmy alleged that the decision to drop the case was politically motivated and that the STO’s making such a decision without a board resolution was part of an ongoing campaign to “cleanse” political figures affiliated to the current “coup regime”.

“They are now cleansing all the corrupt politicians who were involved in bringing about the coup on February 7. They started doing this from day one. At first it was MP Ahmed Nazim [Deputy Speaker of Parliament], then MP Ahmed ‘Redwave’ Saleem and now it is MP Riyaz,” Fahmy said.

In late February the Criminal Court dismissed four cases of fraud against Nazim – an MP of the People’s Alliance formerly headed by Gayoom’s half brother, Abdulla Yameen – stating that his “acts were not enough to criminalise him”.

All four cases against Nazim concerned public procurement tenders of the former Atolls Ministry secured through fraudulent documents and paper companies, and included setting up several paper companies to win a bid worth US$110,000 to provide 15,000 national flags for the atolls ministry in 2003, and a similar tender worth US$92,412 to provide 15,000 national flags in 2005. A third count – conspiracy to defraud the ministry in 2003 in a similar manner to win a public tender for procuring US$115,758 worth of mosque sound systems – was also dismissed.

On February 28 the Criminal Court ruled that MP ‘Red Wave’ Ahmed Saleem – a member of Gayoom’s Progressive Party of the Maldives (PPM) – was not guilty in a corruption case filed by the state, accusing him of paying Neyza Enterprises Private Limited 50 percent of the money given to the former atolls ministry to buy sound systems for mosques in the islands.

Nasheed’s Maldivian Democratic Party (MDP) has alleged that key parts of the judiciary were in the hands of the supporters of former President Gayoom, “and now we are seeing the truth of that claim,” said the party’s spokesperson Hamid Abdul Ghafoor, following Saleem’s case.

“Dr Waheed’s regime is using the courts to settle old scores, to reduce MDP’s parliamentary majority and to wipe the slate clean for government supporters,” he claimed.

Fahmy today alleged that the courts were now “turning down cases against these people, even when the cases have been submitted by an independent auditor general.

“This is clear infringement of free and fair justice system. Now Riyaz is released from owing millions of rufiyaa to a public company, with public shareholders,” Fahmy said.

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Dhiraagu warns of “degraded” internet service over submarine cable damage

Dhiraagu has said its internet customers could face “degraded service” for the next few days as work is undertaken to repair a damaged submarine cable between the Maldives and Sri Lanka.

Dhiraagu spokesperson Imjad Jaleel said that “diversity routes” were
now being used by the company to ensure that locally hosted web
services could be accessed today, as it aims to prioritise the
provision of web browsing and e-mail services to customers.

“There should be no problems for locally hosted sites right now,”
Jaleel claimed. “We are looking to make use of diversity routes that
will allow us to prioritise important services such as e-mail and
browsing services for our customers even on sites based
internationally.”

Degraded services started occurring on Wednesday evening.  Some business
organisations have expressed concerns that interrupted services were
already having a detrimental impact on local businesses such as those in the
tourism sector that rely on online bookings.

Dhiraagu is one of the country’s largest internet service providers,
dominating the internet and telecommunications sector. Dhiraagu’s main
competitor Wataniya has said it does not currently have any issues with the
provision of its internet services.

Submarine cable

According to Dhiraagu, the problem with its internet service has arisen due
to damage sustained on a section of international submarine cable
located 26 kilometres off the coast of Sri Lanka. The cable is used by
the company to provide broadband services to the country.

Jaleel said the damaged area of cable had been located and a
regionally-based specialised vessel called the Asean Explorer was now
on its way to the affected area to conduct repairs. The vessel is
expected to arrive in the next 24 to 48 hours.

“This has impacted our customers’ access to the internet, it is
estimated that normal services will return in three to four days,”
Jaleel said. “The cable is located 40 metres below the water and this
is the first time that damage like this has taken place on our
network.

Jaleel said the company would not know the exact cause of the damage
to the cable until the Asian Explorer vessel began repairs. However,
he said the damage may been caused by a vessel anchoring in shallow
waters.

“We would like to assure customers that we are presently seeking out
diversity routes and that everyone should be able to access locally
hosted web sites,” he said. “The Asian Explorer vessel that is on its
way now is designed specially to deal with repairs like this.”

Speaking to Minivan News today, the Maldives National Chamber of
Commerce and Industry (MNCCI) Vice President Ismail Asif claimed that
it had received several concerns regarding the impact of internet
connectivity issues on local business.

Asif claimed that the chamber had not received information from Dhiraagu as
yet on the issues affecting local internet service, adding that the
organisaton has itself been experiencing problems with its e-mail.

“We are still awaiting information right now from our members on the
scale of the impact, but almost everything we do relies on e-mails,
even letters we receive are scanned rather than faxed these days,” he
said. “Therefore, we expect there to be a huge impact on businesses.”

In terms of specific vulnerabilities to internet connections, the
MNCCI said that many of the country’s tourism related companies
significantly based their operations online.

“We cannot give the number of websites that are down right now
obviously as the internet situation is hindering our own work,” he
said.

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President announces resumption of fishing subsidies

President Dr Mohamed Waheed Hassan has said he intends to begin resuming the payment of subsidies to fishermen within days. The President added that he would try to provide fish at better prices by increasing the promotion of pole and line fishing in other countries.

President’s Office spokesman Abbas Adil Riza has said that the money was badly needed as the industry was in “real economic trouble,” despite the government coming under pressure to cut state expenditure.

Speaking to Minivan News today, Minister for Fisheries and Agriculture Ahmed Shafeeu said that the subsidy had not been paid at all in 2011. He added that this year’s subsidies this year had not been reserved exclusively for fuel,  with funding being set aside for measures to encourage investment in ice plants – for which there was apparently a high demand.

Shafeeu also spoke of the ministry’s plans, unrelated to these particular subsidies, to improve access to loans to encourage investment in the industry.

“In terms of the economics of the sector, since 2006 we have seen a decline in fish numbers. In terms of total exports, it has gone down. There are many factors – a lot of them to do with management of the budget. Also there are risks due to the world economic crisis,” said Shafeeu.

The local industry is also thought to have been affected by the mass harvesting of fish stocks by foreign vessels in and around Maldivian waters. Traditional pole and line techniques struggle to compete with the more sophisticated technology and less environmentally considerate practices used by some competitors.

Deputy Minister for Fisheries and Agriculture Ali Solih explained that the proposed subsidies amounted to Rf100 million for the year, and would be disbursed once approval came from the Majlis. He added that the current members of the ministry had been working towards this goal since assuming their posts.

Methods

The use of the traditional pole and line method being encouraged in the president’s speech have been used in the Maldives for millennia and are an important feature of the industry which has long prided itself on its sustainable practices.

The previous government, however, felt it necessary to look into greater opportunities for the use of long line fishing techniques. It argued that, despite the greater risks of harming protected species, the technique offered far greater economic opportunities for a struggling industry.

A research officer at the Ministry of Fisheries and Agriculture at the time argued that long line fishing vessels did not have to travel as far as pole and line ships, lowering fuel costs and so making operations more viable economically.

Former President Mohamed Nasheed, speaking at the opening of the Majlis 2010 session that it was not feasible to burn fuel and engage in pole and line fishing in big vessels.  He claimed at the time that experts had advised him it would be more profitable to use those vessels for group long-line fishing.

Fisheries Minister Shafeeu said that the ministry would seek to continue this policy of providing varied opportunities to local fishermen. He said that pole and line fishing remained the most “prominent” method used in the Maldives, but said that “diversification is something [that is] required”.

A feature of this approach has been seen in the granting of long-line licenses within the 200-mile Exclusive Economic Zone (EEZ) exclusively to Maldivian businesses. In April 2010, foreign licences for long lining were terminated by the government.

The long-line fishing method appears as something of a double edged sword for the industry.  While the method offers the potential for better harvests of species that subsist in deeper waters such as Yellowfin and Bigeye tuna, it is also alleged to potentially  harm the marketability of Maldivian marine produce.

Shafeeu noted that the number of skipjack tuna exports, most commonly caught using the pole and line method had dropped “significantly” although the industry had been able to sustain the numbers of Yellowfin being caught.

Many chains such as Marks and Spencer in the UK place great value on purchasing tuna caught using the traditional economically friendly pole and line method. The marine conservation group Bite Back, in 2010, expressed its belief that the use of long line methods in the Maldives could result in a UK boycott of its tuna products.

Depleted financial stocks

The Dhivehi Quamee Party (DQP) last year took the Finance Ministry and the Fisheries Ministry to court over the failure to pay fuel subsidies to fishermen.

In a similar case yesterday, the Civil Service Commission (CSC) announced its decision to repay money withheld from government employees during the previous government’s attempts at enforcing austerity measures in 2010.

Abbas remarked that due to a Civil Court ruling on this issue, the Rf443.7 million owed to civil servants was now a “legally compulsory payment.”

This financial commitment comes at a time when the government faces a widening budget deficit, argued by Finance Minister Abdullah Jihad to stand at Rf2 billion, based on current rates of spending.

As part of its new austerity measures, the People’s Majlis has been re-examining the Aasandha health care scheme in an attempt to rein in state overspending. Thorig Ali Luthfee of the National Social Protection Agency (NSPA) recently told the Majlis’ Financial Committee that the scheme was likely to spend more than double its allocated budget this year, according to Sun Online.

Were the government able to tame this overspend, it could expect to save around Rf500million. Minivan News was unable to contact Finance Minister Jihad or Ahmed Nazim, head of the Majlis’ Financial Committee,  regarding further attempts to cut spending at the time of going to press.

The International Monetary Fund (IMF) told the people’s Majlis earlier this month that a failure to reduce spending could have disastrous consequences for the Maldivian economy if it results in the depletion of its foreign currency reserves.

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Government seeking international PR firm to counter negative publicity, “rally alliance of support”

Additional reporting by Neil Merrett and Zaheena Rasheed.

The new Maldivian government is in the process of recruiting an international public relations firm to counter negative publicity and “gain understanding and public acknowledgement of the Maldives from the international community.”

Minivan News obtained a request for proposals (RFP) document issued by the Maldives Marketing and Public Relations Corporation (MMPRC) on April 9, outlining the government’s media strategy and seeking a company to provide “strategic counsel”, “stakeholder engagement”, “proactive” media relations and “key message and storybook development”.

Objectives for the three month contract, bids for which close on April 14, include boosting tourism confidence, improving the image of the Maldives, and demonstrating the government’s “commitment to strengthening democracy and sustainable development”.

The successful agency will be required to target stakeholders in the UK, USA, Commonwealth countries, “all relevant EU institutions”, academic institutions and NGOs, “arrange 1:1 meetings with influential and open minded potential champions”, and “arrange briefings to build links at various levels with the UK, US, Commonwealth and major European governments.”

The agency will “feed in academic arguments to those identified”, and “determine champions who are willing to speak publicly on Maldives”, in a bid to “Rally an alliance of support for the Maldives”.

Locally, the chosen company will be required to “assist with the roll out of policy and other announcements to media, parliamentarians,government, NGOs and others.”

The successful bidder will be required to develop “key messages, including facts and proof points” concerning “events surrounding the recent incidents in Maldives”, pushing the “core platforms of democracy and sustainable development.”

The MMPRC will task the agency to “Begin the process of developing relationships with key journalists who are friendly and receptive”, and “Provide avenues for proactively seeding positive stories”.

“One to two high profile, credible and friendly” journalists would be targeted for “1:1 relationships”, while a press trip of 3-5 reporters would be arranged before June.

The agency should furthermore “Ensure inaccuracies in coverage are corrected immediately to avoid pick-up and further dissemination” and “help provide balance to negative stories”.

President Mohamed Waheed Hassan’s Spokesperson, Abbas Adil Riza, said he was unaware the government was seeking to retain an international PR firm.

“I think it’s a good idea if we lack capacity to do it in the country,” he suggested.

Negative media coverage was “tarnishing the image of the Maldives”, Riza said, “because the former President [Mohamed Nasheed] is not getting what he wants.”

Such an agency should “lobby the press, make sure they report what actually happened,” Riza recommended.

“The MDP burned down buildings in acts of terrorism. We must expose the MDP for what it is. It is not democratic,” he said.

Deputy Minister of Tourism, Mohamed Maleeh Jamal, said the MMPRC had been recruiting PR agents in several countries, including Germany and the UK.

“The main focus right now is increasing investor confidence. We have to include all fronts include economic angles,” he said. “There has been a barrage of international media coverage and we need to try to convert this interest into positive coverage.”

Negative media coverage of Maldivian political strife had particularly impacted emerging markets, Jamal said. “We’ve a trend of delayed bookings from China, the Middle East and Africa – emerging markets,” he said, adding that traditional markets, such as Germany and France, had been largely unaffected.

Jamal said he was unaware of the responses to the April 9 RFP: “That’s at a technical level. I’m not involved.”

Public relations in the Maldives

Politicians in the opposition parties under Nasheed’s government, including Dhivehi Qaumee Party (DQP) leader Dr Hassan Saeed (now advisor to the President), have previously used the London-based Campaign Company.

Chief Executive of the Campaign Company, Graeme Wilson, told Minivan News this week that “We have no relationship with the Maldivian government”.

According to former President Maumoon Abdul Gayoom, founder of the Campaign Company, Jonathan Upton, visited the Maldives in 2011 and recommended that leader of the Dhivehi Rayithunge Party (DRP), Ahmed Thasmeen Ali, sideline the former President- then the DRP’s ‘Honorary Leader’.

“[Upton] did not have any idea of the views of the Maldivian people and the political situation of the Maldives. His recommendation to keep me aside, without knowing the support of the majority of the Maldivian people as they have seen the development and changes during my presidency, was not a politically mature recommendation,” Gayoom wrote, in a 12 page open-letter published in March 2011 outlining Thasmeen’s alleged leadership failings.

“You are showing characteristics that cannot be prevented after being deceived by the words of people who are unaware of the political scenario of this country,” Gayoom wrote.

The Campaign Company had been engaged by Gayoom “to build his party and advise on how to manage and develop the DRP”, foreign minister under Gayoom and Nasheed, Dr Ahmed Shaheed, told Minivan News in June 2011.

In 2010, Dr Hassan Saeed used the Campaign Company during a PR tour of UK to meet MPs and journalists, representing the opposition coalition.

During the visit, Minivan News obtained an email exchange with a lobbyist then contracted by the Campaign Company, Peter Craske, soliciting a meeting between the recipient and the DQP, “which is formed of an alliance between the DRP and MDP parties”. Craske subsequently apologised for the error, and noted that the email did not result in any meetings.

Hill & Knowlton leads Maldives’ democratic reform

Another PR firm, New York-headquartered Hill & Knowlton (H&K), was commissioned by Gayoom in 2003 and subsequently recommended – and in some cases implemented – most of the pre-2008 democratic reform in the Maldives.

H&K’s report on the Maldives, titled ‘Issues audit and communications strategy for the Government of the Maldives’, revealed that the firm was responsible for much of the human rights and governance reform that paved the way for the country’s first democratic election in 2008.

The vast majority of recommendations in the report were subsequently implemented, portraying Gayoom as mellowing in the lead up to 2008 following the autocratic excesses of his 30 year rule.

H&K’s recommendations included the separation of the security forces into police, military and correctional institutions, constitutional reform and the introduction of multi-party democracy, strategies for the Human Rights Commission of the Maldives (HRCM), reform of the Majlis, reform of the criminal justice system, including an end to the practice of flogging, and even the introduction of religious freedom.

“Expectations have now been raised and presidential promises made; the delivery of meaningful reform is now required,” H&K said in 2003.

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Q&A: Former CEO of IGMH Cathy waters

CEO of Indira Gandhi Memorial Hosptial (IGMH), Cathy Waters, left the Maldives on Friday after more than a year at the helm of the country’s largest hospital. Waters, along with Nursing Director Liz Ambler and Medical Director Rob Primhak were recruited in January 2011 by UK-based NGO Friends of Maldives (FOM) and the Maldives High Commission to improve the quality of local healthcare. Ambler and Primhak have also left. Minivan News spoke to Waters prior to her departure.

Waters provided detailed briefing notes on the state of the hospital to accompany this interview (English)

JJ Robinson: What was the state of the hospital at the time of your departure?

Cathy Waters: There are now systems and processes in place so key decisions can be made. People know how to make those decisions and know where the systems and accountability now lie. Patients may not see that initially as a benefit, but we were making sure the foundation and systems were right.

I’m confident those in now in place. Clinical systems to ensure patient care are now there, and there are things such as a proper patient complaint system.

Equally we have introduced a zero tolerance policy to protect staff. We’ve noticed the number of verbal and violent attacks against staff has gone up. I don’t know why – but certainly over the last few months we’ve seen an increase in violence against staff. Now if you go into IGMH you’ll see posters and leaflets in Dhivehi and English.

JJ: One of your main innovations was the introduction of triage. Was this a hard concept to introduce?

CW: Maldivians tend to panic about things you or I would describe as fairly minor healthcare issues. If you were to cut your finger and it bled, you would probably hold a tissue on it, wrap something around it and deal with it yourself. Here, people panic at the slightest bit of blood.

A really good example of this was when we had some of the casualties coming in from the recent protests. A little bit of blood and people wanted to bypass the triage and go straight into the emergency room, when perhaps all they needed was to put a wad of padding over it and have it stitched up in time. There was no urgency about it, but people panic.

The most challenging part has been persuading people that they don’t need to be in the actual emergency room – that it’s acceptable to wait if it’s not something urgent. That has been so difficult to get across. But it is working, and was brought into place in November 2011. Now it’s been in place for a few months we know there are alternations we need to make it more effective.

JJ: You said earlier that you’ve had politicians ringing you up to bypass triage and go straight to emergency?

CW: Absolutely. I think they see it as their right to get access to treatment and the [in-patient] rooms really quickly, and I think in the past that’s why the triage system has failed, because people back down and say ‘OK, come straight to the emergency room.’

We’ve stuck to our principles and said we have to do this properly, because if we start letting politicians in or whoever just because they think they should be in, the whole purpose falls apart. very clear stick to principles.

JJ: Were you able to train triage staff to the point where they could resist that pressure?

CW: Yes, we had to do quite a lot of work, and there’s still a lot to do. We had instances when there were quite a few people waiting and instead of being triaged, they were just waiting for treatment. Then the doctors said let’s just cancel triage and let people into the emergency room. That defeats the whole purpose.

It’s about explaining to people. The most difficult area was when parents come in with children they believe are very sick, when actually it’s not urgent and they just need to see a doctor. But they panic, and that’s the area with the biggest problems. A lot of it is education and helping people realise that they don’t always need to come to hospital – that there are straightforward, basic things they can do.

JJ: How has the Aasandha scheme (universal healthcare) impacted IGMH?

CW: Now Ashanda has been opened to ADK and private health clinics, it’s created major problems for IGMH, because we still have loads of patients coming to IGMH, but we also know that those patients are also going to ADK and private clinics. The dilemma for us is that a lot of the private clinics are run by doctors who work in IGMH. That a fairly difficult area.

JJ: So the doctors end up working less at IGMH?

CW: They would probably argue this, but I would say the difficulty for us is commitment. The average Maldivian doctor will get a third of his income from IGMH, and two thirds from a private clinic. There is a huge incentive for them to do more and more private clinics.

For example, anecdotally a doctor in IGMH may see 6-20 patients in a clinic session. Apparently some of those doctors are seeing 70-75 patients in the same session at a private clinic.

It’s a big problem and the government needs to think about it. If you want doctors to be 100 percent committed to IGMH, you need to do something about increasing their salaries or minimising the amount of time they can do private work.

JJ: How sustainable do you think universal healthcare is in its current incarnation? Does there need to be a monetary barrier to entry?

CW: My view is that it was introduced far too quickly without thinking about what checks and balances needed to be in place. Some patients have already spent their Rf 100,000 (US$6500) entitlement. People see it as their right to spend Rf 100,000, and there wasn’t a public education campaign beforehand so people understand how to use it properly.

There are reports of people going from clinic to clinic and seeing more than one doctor in a day. If they’re not quite happy with what they got from one doctor, they’ll go to the next.

At IGMH the number of non-attendances for appointments has increased because people aren’t paying for it any longer. The patient doesn’t feel they are losing anything, although they are because they are using up their Rf 100,000. We have gaps in our clinics because patients have suddenly got an appointment at a private clinic quicker. And of course we have to work on our appointment system and how people access the hospital.

JJ: We have previously reported on tensions between local and foreign doctors over pay and allowances, such as accommodation. Were these resolved?

CW: It’s still an issue. The problem is that there are lots of inequities. Expat doctors get accommodation, Maldivian doctors don’t. But Maldivian doctors have the ability to do private work, which the expat doctors don’t, so there are some tensions.

Having said that, there are teams of doctors who work really well together. One of the things we have been doing is making sure the clinical heads of department meet once a fortnight, to try and make sure people are working together.

JJ: You have spoken about a contract IGMH had with the State Trading Organisation (STO) to supply medical equipment and consumables, at four times the going rate. What was behind this?

CW: The contract was initiated well before I started at IGMH. It was done for good reasons because there were huge problems with supplying medical equipment, but what we found was that we were paying hugely over the odds for goods we were receiving. Some of the issues with supply are still there, but generally speaking it has radically improved.

We had to do a lot of work on our side. Doctors had been stockpiling, so we have to educate them now that there is no need to stockpile, because it is increasing our expenditure.

It was also a major battle to understand our financial situation. When I first started people were spending money left, right and centre, and there was no financial control. Now we are are very clear about where we are – we don’t like where we are, because it’s not a very good financial position – but at least we know where we are. We are trying to enact a financial recovery plan, but we haven’t been able to go as far with it as we’d like.

JJ: What about the Indian promises to pump money into IGMH? Did you feel they were persistently interested in it?

CW: They came and pledged this money a considerable time ago. The project was supposed to start in April, but it slipped and slipped. It desperately needs to happen. The building is old and bursting at the seams, it is not able to cater to the needs of patients it has, and when it rains it leaks like a sieve. Things like the electric wiring are very old – it all needs to be redone.

JJ: You initially signed for another year, but mentioned concerns about job stability. How did things change at the hospital after the recent political turmoil? Should that be affecting a hospital?

CW: I don’t think it is – the Finance Ministry said, the same as the previous government, that we could not change salaries or appoint new people. So we have vacancies and we have to hold those [closed], with the exception of clinical staff. We argued that we needed to replace senior doctors if they leave. But we are carrying an excess of admin staff we desperately need to reduce. But the previous government stopped us doing that. To enable us to become a more effective organisation we need to do that.

JJ: What was it like working at the hospital, personally? Did you face challenges as a foreigner?

CW: Our chairman said it was not about me as a foreigner, it was about management. There was a general resistance to administration, which I detest. We have tried to bring together management and clinical staff, so we have a stronger team. What was happening before was that you would have different departments working in silos. Yes there’s been resistance – I came in with different ideas, trying to bring in a different style of working, empower staff to make decisions and come up with the solutions. They have the answers.

The language barrier was very frustrating. I was very vocal about not being politically driven, and saying what I thought. But at senior meetings in the Ministry of Finance they would always make a big thing about saying ‘Sorry, we are holding this meeting in Dhivehi’ – even though these were senior people with a good understanding of English.

At one particular meeting they spent most of the meeting slagging off IGMH. Fortunately I had taken another member of staff who was frantically writing things down. They would ask for a response but I couldn’t argue as I didn’t know what had been said. I found it really frustrating and I felt they used it sometimes.

JJ: You said you were keen for a Maldivian to take over after your departure? Is that capacity available locally?

CW: I think that given another six months we would have had a number of people ready to take it on. I had appointed a director of operations, who potentially could.

I made clear in my final comments to the new health ministers that they need to get the right person, and not necessarily make a political appointment, because it is such a key job driving change in the health system. Ultimately it’s their choice, though.

JJ: What do you feel like you’ve got out of the experience personally?

CW: I think I’ve become much more tolerant and patient, and politically aware – with a small and a large ‘P’. Diplomacy skills have been honed greatly. I also had my eyes opened about living in a small place where everyone knows everyone else. If someone was in the same classroom as the President, they think nothing about calling the President and telling him what they think of you.

It also really opened my eyes to the complete lack of confidentiality. People don’t think twice about leaking highly confidential information to whomever.

JJ: What are the top three areas the hospital needs to focus on right now?

CW: Firstly, getting to a stable financial footing, be that through the health insurance scheme, although it is not bringing in enough to allow IGMH to stand on its own two feet.

Secondly, the government needs to decide whether IGMH is a public or a private hospital. That’s a fairly difficult tension they need to resolve.

Third, let whoever is running IGMH run it, and have the confidence to run it, and stop all the political interference. That was the number one frustration – not being allowed to get on and do my job. We’d have a plan, then something completely unrelated would come in from the side and stop something I tried to enact. It was so difficult to keep people motivated when that happened.

There are some fantastic staff at IGMH. Liz the nursing director was also leaving, and we had an amazing leaving do, in traditional Maldivian dress. There are some really special people there.

If I can add a fourth priority: to continue to try and change the work ethic so people only take sick leave when they are genuinely sick.

Some of the senior team are very good, and have taken no sick leave – I haven’t had a day off sick the whole time I’ve been at IGMH. It never crossed my mind to take sick leave unless I was genuinely sick. But people just take loads of sick leave – they see it as their right.

I will miss it. It’s been a fascinating experience.

Biographical note: Cathy Waters arrived at IGMH in Feburary 2011, first as General Manager, and then CEO. In June/July 2011 she was asked to take on the role of Managing Director of the Male’ Health Services Corporation (MHSC). She has 32 years experience working in health care and health care systems, and has previously worked in the UK’s NHS as a CEO and as a Director of a small consultancy company specialising in organisational development and change management.

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Revenue figures reveal economic impact of change in lease extension policy

The Maldives Inland Revenue Authority (MIRA) released figures earlier this week showing the extent to which the change in island lease payments has affected the Maldivian economy.

According to MIRA’s figures, the total revenue projected for March was Rf1044 million [US$ 68 million], but had received 37.9 percent lower than the projected revenue “mainly due to the unrealised revenue from the Lease Extension Period.”

MIRA had anticipated to receive a total of Rf375 million [US$ 24 million] for lease extensions – however, due to government’s recent decision to accept resort island’s lease extension payments in installments – the  income received dropped to nearly Rf23 million (US$1.5 million).

These figures were published the same week that the International Monetary Fund (IMF) warned the People’s Majlis that drastic measures must be made to reduce the government’s budget deficit. At the same time, the government announced that it was promoting a third of the police force and paying two years of allowances to defence personnel.

The IMF noted that the budget figures it had seen did not reflect the lost revenue resulting from the change in collection of lease payments.

Concluding the IMF’s visit to the country, the group’s representative suggested that the government reduce civil service pay and benefits, re-introduce recently removed import duties, increase the Goods and Services Tax (GST) and increase the bed tax by 50 percent.

The IMF’s expressed it fears that the government may exhaust its reserves if it did not resolve its budgetary imbalances: “Immediate steps have to be taken. This is the reality, we have to face it.”

MIRA’s figures appear to bear out the fears of the former Tourism Minister Dr Mariyam Zulfa, who predicted that the new government, having “over-interpreted” the repayment clauses in the Tourism Act, could expect to see up to $135 million taken from government revenues in the next year.

At the time of the Tourism Ministry’s announcement of the extension payment changes, the government had already received lump sum payments from 25 resorts equating to US$40 million and was expecting nearly US$135 more from 90 resorts.

“The lease extension is about increasing the asset value of the properties. In the Maldives, all the islands actually belong to the government and when the second amendment to the tourism law came into place it gave the option for resorts to extend the existing 25 year leases to 50 years,” explained Dr Zulfa, at the time.

“A time period was given and there is a clause [in tourism lease extension regulation] that stipulates that the payment must be done in completion before the lease period can be extended. So, the Nasheed government had interpreted that clause as the payment to be paid in full for the period extended. So, because the wording is such that the payment must be complete before the extension is granted, we interpreted it as the full payment.”

“But there is another clause [in Tourism Act] which says the manner in which the payment is calculated is on an annual basis. This [current] government has over-interpreted that clause and has said that the payment has to be made on an annual basis, but I have always insisted that the value of the government assets must not be allowed to decrease because the payments go to funding welfare services, housing projects, infrastructure projects, health services and so on that would benefit the local community,” she said.

“The current government has not only allowed payment to be made on an annual basis but allow for the payment to start at the end of the 25 year period, which is years away. It is a huge loss to the government treasury, about US$150 million, and I think as a result that a lot of people will be deprived of the many projects that we have started for the benefit of the communities across the atolls,” argued Zulfa.

Meanwhile, the Tourism Minister Ahmed Adheeb has said that the government would reimburse US$ 40, accepted as lease extension payments prior to the change in policy  by deducting the amount from the rent payments.

Explaining the decision at the time, Adheeb also said that the government was happy make things easier for the tourism industry wherever it could, after it had contributed so much to the economy through taxes.

He further claimed that the government was seeking to act in line with a December 2011 High Court ruling against Nasheed administration’s interpretation of the relevant clause in lease extension regulation.

After the ruling was made, and before it lost control of the government, the Maldivian Democratic Party (MDP), had stated its intention to appeal the High Court’s decision. Dr Zulfa reports that the current government has removed this appeal from the high court.

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Maldives reverts to ‘Sunny side of life’ branding, targets one million tourist arrivals for 2012

The Maldives Marketing and Public Relations Corporation (MMPRC) has appointed staff to target specific markets for the tourism industry, in a bid to reach one million tourist arrivals in 2012.

The markets to be targeted included Italy and Japan (Ibrahim Asim), Germany and Switzerland (Fathimath Afra), UK, China and Korea (Fathimath Raheel), Russia and France (Najumulla Shareef), Spain (Fathimath Arushee), India (Aishath Rimna) and the Middle East (Mariyam Rasheed).

In a press conference on Monday, newly-appointed Deputy Minister of Tourism Mohamed Maleeh Jamaal – previously Secretary General of the Maldives Association of Travel and Tour Operators (MATATO) – said the corporation intends to launch several campaigns and PR activities in major tourist arrival markets to the country.

“We have about 102 resorts and around 26,000 beds. If each resort sets a target of bringing three more tourists to each bed, or 77 more tourists than the number that booked the resorts last year, we would easily reach the target,” Jamaal said.

He said the corporation plans to conduct joint promotion campaigns along with the tour operators and resorts, and had segmented itself to target each market.

The MMPRC revealed that it had been given a budget of Rf 70 million (US$4.5 million) to conduct marketing activities for the year.

Jamaal said that the budget for last year had been US$2.3 million, and with that budget they the country had seen the tourist arrivals of around 900,000.

“So this year, with this budget, we are confident that we can reach the target,” Jamaal said.

Jamaal expressed disappointment over the UK-based NGO Friends of Maldives (FOM)’s travel advisory, asking that potential tourists consider the idea of being a “responsible traveller” by avoiding specific resorts owned by people allegedly involved “in the subversion of democracy, and human rights abuses in the Maldives”.

“We are disappointed because, the tourism industry contributes 70 percent of every hundred rufiya every citizen of this country earns, which means from every hundred rufiya, 70 rufiyaa comes from the tourism sector. So every impact on the country’s tourism sector impacts the general living of the people,” Jamaal said.

“I think those who conducts these activities really envy the [success of] the industry. This is very sad. But we have the plans, and the capacity to overcome such negative campaigns, and therefore we will face every challenge and we will overcome that as well,” he claimed.

Regarding a reported recommendation from the International Monetary Fund (IMF) that the Maldives increase the bed tax levied on the tourism industry because of the state of the economy, and a comment made during a meeting of parliament’s public finances committee about the decline of the Chinese tourism market, Jamaal said that the tourism ministry did not forecast that the decline would continue.

“The Chinese market is improving. Our [predictions] do not show that the Chinese market will decline to the extent the IMF has said, and we had a positive growth in the last three months. This gives evidence to it,” he said.

Chinese tourist arrivals dropped by 34.8 percent to 12,237 in February compared to the same point last year, according to Asian travel trade newspaper TTG.  Around 6,500 fewer tourists arrived from China last month, largely due to the cancellation of charter flights, which are expected to resume in April.

Asked about the impact  media coverage of the political instability was having on the Maldives’ reputation as a safe and stable tourism destination, Jamaal acknowledged that certain international media coverage had negatively affected tourism.

However Jamaal said he believed the situation would not significantly impact tourist interest in the Maldives as a holiday destination.

“Our efforts to counter the bad image given out by the international media will help us recover the decline,” he said.

“In order to consolidate the Chinese market, a senior delegation consisting of key government officials and members of the MMPRC, in partnerships with Mega Maldives Airlines, had decided to go to four major cities in China to meet the authorities, tour operators and journalists.

“We will build awareness in China about what has happened in the Maldives, and I am sure that after that the Chinese market will improve further,” Jamaal added.

“However, we do not believe that the Maldives will be significantly affected by these negative headlines as the destination remains popular in our major source markets like Europe. Despite the economic slowdown that has taken place across the EU, we have seen positive growth.”

Reverting back to Sunny Side of Maldives

Jamaal announced that the country would be reverting back to its former branding ‘Maldives: the sunny side of life’, instead of the ‘Always Natural’ branding introduced under Nasheed’s government.

Jamaal told Minivan News that the decision to revert back to the Sunny Side of Life branding was based on “a number of questions and research the industry had about adopting a new corporate identity for Maldives tourism.”

“At the time of the rebranding we had to ask ourselves certain questions; such as do we have the budget to support a new brand identity? Was it the best time to introduce a new message?” he said. “The Maldives like many nations around the world is facing an economic crisis.”

Jamaal claimed that relying on a strong and established brand was the best direction at present for tourism marketing, but suggested it would be “enhanced” into subcategories such as “Maldives: the Spiritual Side of Life” to promote spa operations.

“This year instead of more generic messages, we will have specific focuses on certain sectors to mirror the efforts of the country’s tourism industry,” Jamaal said.

MMPRC was established during the time of former president Mohamed Nasheed to spearhead the country’s public relations and marketing strategy, replacing the former Maldives Tourism Promotion Board (MTPB).

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IMF will work with us to reduce expenditure, says President’s Office

Government spokesman Abbas Adil Riza said today that the IMF is willing to work closely with the government, after a delegation from the organisation arrived in Male’.

Abbas said that as the government’s current policy is to reduce expenditure, it will require assistance from the IMF.

“The IMF wants to re-engage with the Maldives. The main reason the Maldives was suspended from receiving the funds that were destined for the country was because the former administration could not meet the requirements of the IMF,” Abbas was reported as saying in local media.

“The result of the discussions held with the IMF and this government would be an acquirement of extra $20 million from the IMF. It will be settled in a month or so,” he said.

Abbas denied that the meeting was initiated by the government: “Given that the Maldives is a member of the IMF meetings may be held at any time, so they’re not here due to an initiative taken by the government.”

The previous government’s discussions with the IMF became deadlocked after the government was unable to comply with the group’s borrowing requirements conditions concerning deficit reduction.

During his recent inaugural address to the People’s Majlis, President Dr Mohamed Waheed Hassan commented on the current state of the economy.

“Estimates for 2012 indicate that the debt component of the current account in our Balance of Payments will increase by 11 per cent as compared to 2011,” stated the president. “With respect to GDP, debt of our current account will go up to 28 per cent. This figure in 2011 was 26 per cent. The main reason for this rise is the expectation that imports will increase, resulting in an increase in expenditure for these imports.”

Government expenditure outstripped revenue  by 20 percent between January and September last year, claimed the Ministry of Finance and Treasury.

The budget deficit, which stood at just 1.9 percent of the economy in 2004, expanded to 7.3 percent in 2006 and ballooned to 23.9 percent in 2007, according to the IMF.

The fiscal deficit exploded on the back of a 400 percent increase in the government’s wage bill between 2004 and 2009, with tremendous growth between 2007 and 2009.

On paper, the government increased average salaries from Rf3000 to Rf11,000 and boosted the size of the civil service from 24,000 to 32,000 people – 11 percent of the total population of the country – doubling government spending from 35 percent of GDP to 60 percent from 2004 to 2006.

In a 2010 World Bank report headed ‘How did the Maldives get into this situation?’, it was noted that “the origin of the crisis is very clear… the wage bill for public sector employees grew dramatically in a very short time.”

According to the World Bank, a 66 percent increase in salaries and allowances for government employees between 2006 and 2008 was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”

After declaring “significant policy slippages”, in particular the government’s failure to curtail spending,the IMF felt it necessary to delay some the Maldives’ funding in 2010.

After the Nasheed government struggled to reduce expenditure due to political constraints, in particular the Civil Service Commission, it introduced a tourism goods and services tax (TGST) in order for the local economy to benefit from the lucrative but often removed tourism economy.

The World Bank’s annual ‘Doing Business’ report for 2010 saw the Maldives’ ‘ease of doing business’ ranking fall from 71 to 87, and identified no ‘business-friendly’ reforms.

The Ministry of Education has recently announced a freeze on all Public Private Partnership (PPP), which were originally intended to remove financial burdens from the government, after raising questions over the legality of the tender processes.

Following the recent inaugural speech of President Waheed, his spokesman Abbas Adil Riza told Minivan News that the current government would not be looking to increase the Tourism Goods and Services Tax (TGST) but pledged that the government would seek to “live within in its own means.”

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New transport minister calls for redevelopment of airport runway

Minister of Transport and Communication, Dr Ahmed Shamheed, has criticised GMR’s plan to develop Ibrahim Nasir International Airport (INIA), arguing that it does not provide needed redevelopment of the runway.

Shamheed said there had been a temporary closure of the airport last week as a large crack on the runway was repaired.

“The development of the runway is not part of the agreement made with GMR. And the way the airport development plan is going, there is no possibility of constructing a new runway. A beautiful design can be made, but we have to consider its sustainability,” the Minister told Sun Online.

When asked to comment, Shamheed told Minivan News that he could not say anything more specific on his department’s next move regarding the repair issues.

“But we are conducting a study into the matter. Once we establish all the facts, we will brief,” said Shamheed.

“We are trying to find out how they are going to address the issue with the runway. There is no quick fix,” he claimed.

At over US$400 million the project is the largest single foreign investment ever made in the Maldives. The plan involves an upgrade the current terminal before the construction of a new terminal on the opposite side of the island of Hulhule, which the developer has pledged to complete in 2014. Ground was broken on the site for the new terminal in December last year.

The new transport minister alleged the runway was in poor condition and in need of critical repairs. An incident in 2010 saw experts from Boeing brought in to advise on such repairs after one of its aircraft sustained damage as a result of water retention on the runway.

Managing Director of the Maldives Airports Company Limited (MACL) Mohamed Ibrahim, previously responsible for the maintenance of the site, two years ago claimed that the runway had to be re-tarred every 15 years, having last been repaired in the early 1990s.

“Devious Indians”

The political opposition under Nasheed’s government, particularly the Dhivehi Qaumee Party (DQP), were persistently critical of the airport development,  with allegations ranging from corruption in the bidding process to claims that the deal would allow the airport to refuel Israeli bombers enroute to bombing Arab countries.

Then leader of the People’s Alliance (PA) and brother of former President Gayoom, Abdulla Yameen, previously described the deal as “economic enslavement.”

Similarly, the Dhivehi Quamee Party (DQP) released a booklet in Dhivehi in December 2011 titled “Giving the airport to GMR: The beginning of slavery”, warning against “devious Indians”.

In the 24 page document (download in English/Dhivehi) the DQP claimed that the agreement did not include any requirement to develop a runway and would allow the GMR group to “colonise” large portions of the economy.

“Indian people are especially devious people”, the DQP booklet claimed. “There is no guarantee at all that GMR will invest the proposed amount. There is nothing the government can do but accept what they say and the documents they provide. This is how all the companies in partnership with the government are run.”

An unattributed letter on the party’s website published at the same time as the pamphlet claimed that the Indian government, in its backing GMR’s investment, “has a choice to make.”

“Does it want its backyard to be peaceful, prosperous, and free from corruption, nationalism, and religious problems? Does it want its backyard to be a place where wealthy Indians can spend their holiday and where its investors are respected and welcomed and not hated? Or does it want to be seen as a backer and sponsor of a corrupt and despotic regime, divorced from public sentiments, as was the case of the United States in the Middle East?”

Spokesperson for former President Nasheed, Mohamed Zuhair, claimed at the time of the contract signing in 2010 that the deal with GMR to upgrade and manage the airport had clashed with the vested interests of several tycoons, including Yameen and Gasim, drawing it into the political arena.

“Gasim was concerned the new airport might take the charter flights he had intended would be landing at the new airport he is building in Maamagilli,” Zuhair alleged at the time, “while Yameen is a third party supplier of fuel at Male International Airport through the Maldives National Oil Company, which has representation in Singapore.”

“These MPs are two individuals of high net worth – tycoons with vested interests,” he explained. “In pursuing their business interests they became enormously rich during the previous regime, and now they are trying to use their ill-gotten gains to bribe members in the Majlis and judiciary to keep themselves in power and above the fray.”

“Politically neutral”

The airport’s CEO Andrew Harrison in 2011 stated in an interview with Minivan News that he was “extremely confident of standing up to any scrutiny because of the way the bid was scrutinised by the World Bank’s International Finance Corporation (IFC)”.

Harrison today declined to comment on Shamheed’s recent statement. In a previous interview, he maintained that GMR had “always been politically neutral in that our remit is solely about developing and operating the airport.”

“We respect whichever party holds the seat of government in the Maldives. The government change is a change we respect and we remain politically neutral. We’ve got a concession agreement and we are sure that any government in power will respect that agreement. We’ve not heard anything that would make us believe otherwise,” Harrison told Minivan News at a press conference in February.

The criticism culminated in a successful court case filed by the DQP against GMR’s levying of an airport development charge (ADC), a source of revenue for the company outlined in the original contract. The court decision left the Nasheed government with the obligation to pay the difference.

Several days after assuming the presidency, Dr Waheed vowed the government would not approach the deal “from a political perspective”, adding, “It is not our intention to harm GMR. Our objective will be to resolve concerns of the public [regarding the company].”

Foreign investors should not be concerned about the political upheaval affecting their interests in the Maldives, said Dr Waheed, but hinted that some investments may come under scrutiny.

“We will not target anybody for political reasons,” he said. “If there are any reasons for concern over investment, of course any steps that need to be taken will be taken.”

Since the recent transition of presidential power, many of the former government’s policies have come under scrutiny. The Ministry of Economic Development announced that all future Public Private Partnership (PPP) schemes would be put on hold, adding to fears that the political turmoil currently engulfing the country would be detrimental to foreign investment.

Former Climate Change Advisor to Nasheed Mark Lynas recently expressed his concern over this issue: “Donors will turn away because of the political instability, and investors likewise.”

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