Category: Business & Tourism

Maldives business news

Government considering nation-wide ban of pork and alcohol

Press Secretary for the President Mohamed Zuhair has said that the government has decided to shut down all the massage parlors in the Maldives and is considering banning the trade of alcohol and pork throughout the Maldives in response to demands made by protestors on December 23.

‘’The government has decided to take urgent measurements to fulfill the demands,’’ Zuhair said. “There are five demands made after raising voice in the name of protecting Islam.’’

Zuhair said one of the demands was to close massage parlors and spas, as there have been accusations that prostitution is conducted widely in these locales.

‘’Therefore the government has decided to close every massage parlor and spa in the Maldives,’’ he said. ‘’Those places are not operated with a special permission from the government, but the government has now begun inspecting those places.’’

Addressing the demand to disallow Israeli flights to land in the Maldives, he said the government has tried to commence operations of any flight only for the purpose of tourism, for the benefit of the citizens and for the benefit of businessman in the tourism sector.

‘’When tourists want to come they will first book the resort before booking the airline and if the resorts cancel their bookings they will not come to the Maldives and the airline will stop operations because it cannot run the business if there won’t be any passenger to travel,’’ he said adding that the situation was in the hands of tourism businessman.

Referring to the demand made to remove all the SAARC monuments placed in Addu, he said under the decentralization plan, the decision rests with the Addu City Council.

‘’The government will not obstruct any decision made by the council to remove those monuments.’’

‘’Next is [UN High Commissioner for Human Rights] Navi Pillay’s remarks made in parliament, according to the President during the meeting she held with the President she did not mention anything that a Muslim would resist,’’ Zuhair said. ‘’The parliament is the one that has said anything in response to comments made by her in parliament, because the meeting with parliament was not organized by the government.’’

Trade of alcohol, Zuhair said, is not a business conducted by the government. He added that the government receives a relatively large amount of money through this trade from Goods and Services Tax (GST).

‘’The businessman running the trade of alcohol receives a huge amount of profit through this business as well,’’ he said. ‘’The government is now considering banning trade of alcohol and pork throughout the Maldives.’’

Only 200 people live in some less populous islands, but 400-500 citizens live in the tourist resorts, he pointed out.

Progressive Party of Maldives (PPM) MP Ahmed Mahlouf today said no matter what Zuhair said the government will not have the courage to ban the trade of alcohol in the resorts.

‘’It is all lies made by the government to mislead the citizens,’’ Mahlouf said.

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Transport, Tourism Ministers summoned for actions against Gasim’s businesses

Parliament’s Government Oversight Committee has decided to summon Transport Minister Adil Saleem and Tourism Minister Dr Maryam Zulfa after the government closed five spas in five Villa company resorts and grounded Airline ‘Flyme’ operations.

Flyme operations were cleared earlier today upon completion of a security inspection.

The companies are owned by opposition Jumhoory Party (JP) Leader and MP ‘Burma’ Gasim Ibrahim.

Transport Minister Adil Saleem today told Minivan News that the parliament has not informed him about the decision and has not yet received a summons.

He said the Transport Ministry had to ask Flyme to stop operations after it received a report that a plane’s windscreen broke during a flight to Male’.

‘’I as the Transport Minister have to be responsible for the safety of the flights operating in the Maldives,’’ Adil said. ‘’We did a safety audit following the incident.’’

He said three things were noted in the audit report.

‘’They have now corrected the three things noted in the safety audit report,’’ he said. Adil said he would not like to tell the media about the three things noted in the report.

Meanwhile Maldives Association of Travel Agents and Tour Operators (MATATO) voiced its extreme concern over the Tourism Ministry’s actions.

‘’The association has not been able to find the reason behind this nor see any investigation done by Tourism Ministry for such irresponsible action,’’ read MATATO’s press statement. ‘’The industry is in the midst of the business period with the new year ahead of us and sees that these actions by the ministry will have serious implications beyond repair.’’

The association noted that transfers that have been arranged for tourist arrival via ‘Flyme’ will be disrupted due to the decision to suspend the airline.

‘’The spa and wellness concept is very popular among tourists and many tourists pre-book their treatments in advance not only in Villa Resorts but across all the resorts in the Maldives,’’ the statement read. ‘’Already several international hotel chains operating in the Maldives are worried that the same could happen to them, and this will have a negative impact on investor confidence and will be a motive for businesses to take money out of the economy rather than inject it locally.’’

MATATO also urged the government to keep politics away from tourism as ‘’majority of Maldivians depend on tourism for their livelihood and it is something to be dealt with extreme caution and care.’’

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2012 budget passed with opposition MPs’ amendments

A state budget of Rf14.6 billion (US$946.8 million) for 2012 was passed by parliament today with Rf3.5 million (US$226,977) added through amendments proposed by opposition MPs.

The budget was approved with 70 votes in favour, two against and one abstention.

Among the amendments passed today included proposals by the opposition Dhivehi Rayyithunge Party (DRP) to shift Rf300 million (US$19 million) from other items to local councils, increase funds for political parties from Rf11 million (US$713,000) to Rf14.5 million (US$940,337) and raise state benefits to the elderly from Rf2,000 (US$130) to Rf2,300 (US$148) to adjust for inflation.

The additional spending on political parties was proposed by Kelaa MP Dr Abdulla Mausoom in reference to the regulation on political parties, which stipulates that 0.01 percent of the state budget must be allocated for party finance.

An amendment proposed by Fares-Maathoda MP Ibrahim Muttalib to prevent privatisation of the Maldives Post Limited (MPL), State Electricity Company (STELCO), Island Aviation and the Housing Development Corporation (HDC) was passed after Speaker Abdulla Shahid cast the tie-breaking vote.

Of the five public companies proposed by the government, Muttalib’s amendment stated that the government could privatise only Maldives In-flight Catering (MIC).

A total of Rf750 million (US$49 million) was projected as revenue from privatising the state-owned enterprises.

Seven amendments proposed yesterday by Jumhooree Party Leader and Maamigili MP Gasim Ibrahim to scrap the privatisation plans on the grounds that it violated the Public Finance Act were not put for a vote after parliament’s newly-appointed Counselor-General Fathmath Filza advised that the government’s proposals were not unlawful.

Other amendments included proposals for the Ministry of Finance to provide detailed information of development programmes including selected islands, funding plans and schedules before next year’s budget debate commences.

Meanwhile over 50 new development projects were added by the budget committee, which also increased funding for independent institutions by Rf192 million (US$12.4 million) and included Rf100 million (US$6 million) as fisheries subsidies.

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Comment: Is privatization only happening in the Maldives?

Privatization is one of the economic policies of modern governments, be it large or small, democratic or authoritarian, capitalist or socialist. Privatization is a global phenomenon. The trend towards privatization can be traced back to the 1970’s and 1980’s.

Firstly, it was President Jimmy Carter who in the year 1976 said American Administration ‘lacked administrative skills’ for the performance of daily work, which shook entire public administration and changed its traditional performance. This led to  the emergence of new approach in the discipline of Public Administration called ‘New Public Management’ (NPM) perspective.  The successor of Jimmy Carter was Ronald Reagan, who was convinced that the administration must undergo changes to tackle new problems. America was facing huge budget deficits and inefficiency, which Reagan accused as the result of the misallocation and mismanagement of public funds.
The idea which promoted privatization was that government is not the solution to the problem, but rather it is the problem to the solution.
In England Margaret Thatcher, then prime minister, was faced with similar situations. The public spending was increasing, as productivity and efficiency of public bodies were in decline. This also added fuel to the growing idea of free markets, deregulation and privatization. The government which governed least, or the ‘rolling back of the state’, was the idea behind privatization.

What about communist and socialist states?
For a long time China was regarded as an ‘inward looking’ and isolationist country. During the revolution in 1949 chairman Mao was much inspired by the writings of Marx and Lenin which led to establishment of the communist state. However in the year 1979 Chinese leadership felt it must compete in international trade to help boost their economy. Today China is regarded as the world’s second largest economy, with growth rates around 10% per year.

With the fall of the Berlin wall in the year 1991 the Soviet Union disintegrated. This marked the end of the rivalry between communist Russia and Capitalist America, and was regarded as a triumph for democracy and capitalism. This made the whole world believe that democratic states are the best states and capitalism is the best economic policy. To perpetuate the idea of capitalism and democracy which favored privatization, international institutions such as IMF, World Bank and WTO promoted ‘Washington Consensus’ in the interest of the West.

It is also interesting to note that the so-called socialist state of Cuba, under the leadership of Raul Castro, talked in favor of privatization. Cuba planned to layoff half a million state workers stating that too many workers with low productivity burdens the budget.

The Indian case
Indhira Gandhi was the champion of Indian socialism during the 1960’s. The word ‘socialist’ was added into the Indian constitution to direct its policies towards socialism. The nationalization of 14 Indian banks and its coal industry came when socialism in India was at its peak. However India entered into a debt trap by the end of 1990’s because of excessive wasteful public expenditures and inefficiency in the public sector. Therefore India adopted the new economic policy Liberalization, Privatization and Globalization (LPG) in the year 1991 under the leadership of the then finance minister Manmohan Singh.  Today India is regarded as one of the major emerging economies of the world with the growth rate of around 8% per year.

The Maldives
Privatization of the Maldivian economy has been a hot topic since 2008, with the arrival of the first popularly elected government under the leadership of Mohamed Nasheed. Since this government came into power one of its economic policies has been privatizing the economy. The sale of Male’ International Airport to Indian company GMR was one of the very first steps in this direction. As Maldives tries to expand its tourism sector the need for a modernized airport and efficient management arises to compete with its counterparts, such as neighboring Sri Lanka. The airport was not developing enough to compete and give decent service to the tourists. The airport remained as it was without a major improvement in infrastructure.

In the upcoming year the current government has decided to privatize 5 more companies. This includes STELCO, Maldives Post Limited, Island Aviation, Housing Development Corporation and Maldives In-Flight Catering. However the privatization of these 5 companies was rejected by the parliament, which stated that it violates Maldivian financial laws.

There were plenty of objections to privatization in England and the US during 1980’s, protests in India during the 1990’s and also in Maldives since 2009 against the idea of privatization. I acknowledge the protestors also have points to prove, such as the private sector‘s objective to maximize its profit at any cost and the widening of income disparities because of private sector.  I shall talk about the process and defects of privatization in another occasion.

Therefore the idea of privatization is a global phenomenon and is happening in most countries in the world. It is happening because of inefficiency, delay, corruption, red tapism and nepotism in the public sector, in the interest of delivering results the people expect.

What comes to mind is a couplet written by English poet Alexander Pope. He wrote, “For forms of government let fools contest; whatever is best administered is best.” Therefore it is very clear that whether it be a democratic, authoritarian, socialist or communist government, at the end of the day if that government is not able to administer and live up to its promises, then that government will lose popularity.

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Rf900,000 stolen from Damas Company

Police are investigating the theft of two safes holding over Rf 900,000 (US$58,365) from Damas Company’s head office, located on the fifth floor of the company’s building.

General Manager of Damas Ahmed Shakeeb said on Sunday that the two safes were noticed missing when the office was opened on Saturday.

He claimed the “theft was well planned” as the safes were stolen from the office without any damage to the office or locks.

“Thieves must have used the keys to open the doors. They had only entered the room where the safes were locked in,” Shakeeb said.

However he noted that it is too soon to say whether any employee was involved, adding that the theft has now been reported to the police.

Police Sub-Inspector Ahmed Shiyam confirmed that police are investigating the theft.

No arrests have yet been made.

Meanwhile police are also investigating the theft of Rf 400,000 (US$26,000) from a safe in the office of the Maldives Transport and Contracting Company (MTCC) earlier this month.

According to police, a group of people entered the MTCC office in the Hulhumale Ferry terminal in Male’ by forcing open the door and cutting a hole through the ceiling to the first floor where the safe was located.

The thieves then forced open the safe and took the money.

Police observed the thieves “most probably” had information as to where the safe was located and that there was a significant sum of money inside.

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Comment: Open Letter to the President

Open letter for his Excellency Mohamed Nasheed, The President of The Republic of Maldives.

Excellency, Honourable Mr. President: May I start this open letter by wishing you and your family to be blessed by God alike your Government and all Honourable Maldivians, people that I have in great esteem and very close to my heart.

The first time I was in your lovely country was long ago and naturally like most, I have
repeatedly come back. I did it as a tourist and as well as a business man with interests as I am (or… was until GMR destroyed my business) a small business man with economical activities in your country. At a certain moment I even created projects like the Sea University, that should develop studies and produce medicines using the elements exiting in the sea, as the sea is one of the greatest Maldivian assets. IT is not to be forgotten Excellency, that the day tourists will be gone, the sea will still be there.

The duty free island, a place where tourists could by all sorts of goods duty free, different from the airport, was another project that never saw the light but was design by me with all the love I have for Maldives.

The first time I landed in the Maldives, I was coming from Sri Lanka, and the contrast was so high that I really felt I was on paradise. The country was clean, peaceful, the water blue, the people nice. It was sunny and very organised. I was thrilled.

True that at that time, freedom of expression did not exist, and talking too much or too loud could mean something terrible. I understand that today under your presidency, the situation changed and Maldives is now part of a big international club where freedom and respect for life is a core subject. Being myself an European, I admire you Sir and I admire your government as the path to development and growth always goes via the respect and creativity of people, that naturally cannot exist without freedom.

Sir, I am not an important person. I’m a humble European, that dedicates his life to coach Presidents of corporations in management, as well other institutions like the Catalan High management of the police or the High management of the European Patent or Brand office. I am not a guru, certainly do not pretend to be, but I’m proud of being a humble person, hard worker and a thorough professional that enjoys working in life. I am not into politics and would never pretend to talk about something I don’t know.

I am writing you this open letter Excellency, because I really love your country and feel sad when I see that people taking advantage of it.

A country, Your Excellency, needs above all her people and needs to invest in developing her citizens. If there is not a critical mass of national brain power being the driving force of the economy and culture, the country will fall very easily into the hands of abusers, the same ones that in the international scene move the economy with the only goal of making money without values or respect for the people regardless where their operations take place. For them, the geography is not important. Once the cows are milked, they are ready to move to another pasture with no guilty feelings of what is left behind.

You and your government are making huge efforts to develop the economy and growth. That is perceived from the outside. You work hard under a climate of respect and social peace, thus increasing the well being of Maldivian citizens, and sometimes that takes time to be seen. Results don’t come quick, we know. In this sense it is clear that Maldives needed a bigger up-to-date airport, a modern gate to the country and to get it you had to do work with international corporations with expertise in the field. It is therefore normal that in return those corporations request to have for them the business cake represented by the flow of currency expressed in millions coming from the tourists, a cake that is very attractive. So far, so good, but what about Maldivians?

At this point I apologise as I don’t want to step into the internal affairs of your country, but Excellency I live in a country that has 17 autonomous regions, with 17 governments and with 17 Presidents with their cabinets and a central government, so I think I know something about nationalism and protecting the citizens when it comes to putting the economy into international hands. These days the world is as as small as a handkerchief, so international cooperation is inevitable, but what about the protection
and development of the local business people? Shouldn’t the airport structure consider this? Shouldn’t Maldivian citizens’ business be allowed to profit from their country’s development? Shouldn’t the airport have a place for all, Dhivehi people and international business people? Airports for a country like Maldives are a strategic subject.

Once more I apologise as I am no one to give lessons on the subject but being involved with the Maldives for so long, my love for the country cannot keep me silent. A country is made by it’s people and its people make the country. If that is not to be considered why should people vote for any government? The airport could and can have a place for everybody. The airport belongs to the Maldives, is it so difficult for international corporations to understand it?

With my greatest respect and admiration for you and your government, that is getting more and more respect in the international scene, I remain yours faithfully.

God bless the Dhivehi people.

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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Civil Court orders MVKB to vacate duty free shop within 48 hours

The Civil Court has ordered MVK Maldives Private Limited to vacate the Alpha MVKB Duty Free shop and hand the premises to GMR Male’ International Airport Private Limited within 48 hours, or face eviction by the authorities. The deadline expires at 10:00am on Wednesday.

Civil Court Judge Maryam Nihayath ordered the Police and Customs Department to implement the verdict in the event that MVKB refused to comply.

MVK’s lawyer Azima Shukoor said that shop evacuation and handover by MVKB was not possible as the shop was currently the property of Customs. “There is nothing we can do about the 48-hour deadline since we don’t have access to the shop. We are forwarding the court order to Customs and requesting access to take inventory of the shop before anything further is done,” she said.

Shukoor explained that certain goods required specific air temperatures, and the shop does not currently have cupboards or shop doors.

Shukoor added that MVKB’s case had been appealed to the Supreme Court, and that the company is awaiting that ruling.

The verdict came after GMR filed a case in the Civil Court for the second time when MVKB refused to implement the earlier verdicts of the Civil and High Courts on the issue.

Judge Nihayath recalled that the High Court has ruled that MVKB has no right to use the land without GMR’s consent because it violates contractual rights.

On December 4, GMR officials began to physically remove the Alpha MVKB Duty Free Shop at Ibrahim Nasir International Airport (INIA) after “several notices” to vacate the area were “ignored”.

On December 13, the High Court ruled that GMR had vacated the Alpha MVKB Duty Free Shop at Ibrahim Nasir International Airport (INIA) legally and according to the agreement between both companies.

The High Court stated that GMR gave notice on March 1 and, as per the agreement, the contract terminated on March 31. As no party could extend the termination notice, the court concluded that MVKB had no right to remain at the airport without approval from GMR.

Company CEO Ibrahim Shafeeq subsequently organised a protest on Thursday, December 15 “to demonstrate our opinions and dislike of what GMR has done to us, and to get public responses.” Posters and banners read “Leave us Alone” and “GMR Go Home.”

Shafeeq today said the protest was “very successful, and more people are signing the petition [against GMR].”

Shafeeq said he would continue to protest GMR. “It hurt me and as an individual I have to defend myself,” he said.

Speaking to Minivan News yesterday at the groundbreaking ceremony to mark the beginning of work on the new airport terminal, GMR Chairman G M Rao said the company had encountered similar resistance from existing concessionaires when developing airports in Delhi and Istanbul.

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GMR hosts groundbreaking ceremony for new terminal

Indian infrastructure giant GMR on Monday hosted a groundbreaking ceremony on Hulhule’ for the new terminal of Ibrahim Nasir International Airport (INIA).

President Mohamed Nasheed, GMR Chairman G M Rao, Malaysia Airports Managing Director Sri Bashir Ahmad and assorted officials dug the first hole for the new terminal in front of journalists both local and Indian.

Aircraft belonging to local airlines flew overhead, with seaplanes from Maldivian Air Taxi and Trans Maldivian Airways dropping flowers onto the newly-reclaimed land.

Addressing the gathered dignitaries, officials, journalists and GMR staff, Rao said the company was conscious that INIA was the gateway to the Maldives.

Thoughout the ages the development of human civilisation had been spurred by transport links, Rao said, promising that the new airport would be a hub for economic development and modernisation.

“Since we have come here the love and affection of Maldivians has been of great comfort to us,” Rao said. “As an infrastructure developer GMR is the custodian of the asset it builds, while the asset belongs to the nation and its people. For the last year, we have fulfilled every one of our commitments to the government of the Maldives, and we intend to respect and fulfill every remaining commitment.”

Dehli Airport was ranked 101 in quality in the 40-50 million passenger category by the Airports Council International in Geneva when GMR took it over, Rao said. “Now it is ranked number four. And soon after completing the new airport at Hyderbad, it was ranked first in the 5-15 million passenger category.”

The bidding process for the airport, which has been attacked by opposition parties in the Maldives, “was awarded in a transparent manner in collaboration with the International Finance Corporation (IFC) of the World Bank,” Rao said.

“It was a tough global competition, and [the bid] was finally awarded to GMR. It is a privilege to be entrusted with the responsibility for developing the airport, and GMR promises to deliver the airport well with the timeline.”

GMR had begun sending batches of 29 local employees every two months to India for on-the-job training, he said, and had committed to sponsoring 10 students every year to study engineering disciplines in India.

During the political crisis in Egypt earlier this year, “GMR safely transported 160 Maldivians from Bombay to the Maldives in a special aircraft, after they were evacuated from Egypt,” Rao said.

The company had also taken four teachers from Iskander school to India to see best practices in education, Rao said, adding that there were “various other initiatives in the pipeline.”

“Whatever the challenges, we are committed to delivering the promise we have made to your nation. GMR will find solution to every problem,” he said.

In his own address, President Nasheed said he wished to assure GMR that the government was “200 percent behind your contract, and every single other contract the government has signed with any other foreign party in this country. Not just contracts signed by our government, but also contracts that any ruler of the Maldives has signed with any party. We will honour it.”

The opposition aligned Dhivehi Qaumee Party (DQP) recently filed a successful Civil Court case against the government claiming that GMR’s charging of a US$25 airport development charge for departing passengers, as stipulated in the concession agreement, was illegal. GMR took a stock price hit on the Mumbai stock exchange following the announcement.

GMR was also the subject of protests last weekend and a proposal in parliament for local businesses to be “defended” from the airport developer. The Alpha MVKB duty free shop at the airport was forcibly vacated by GMR and Customs officials eight months after GMR’s original notice. Rulings from the Civil and High courts upheld GMR’s right to terminate the shop’s contract, however company CEO Ibrahim ‘MVK’ Shafeeq launched the protest under the slogan ‘Go GMR Go!’.

Speaking to Minivan News, Rao said that the ADC was part of the agreement with the Maldives, and noted that President Nasheed had said the government would honour the agreement.

As for the stock market impact, “We are not working for the stock market, and we are very confident in the government of the Maldives.”

He noted that the developer had had similar experiences with unhappy concessionaires when redeveloping Delhi Airport, and that this was part of the transition process that would be vindicated when the new terminal was opened.

President Nasheed meanwhile also addressed the gathering in Dhivehi, stating that it he wished to impress upon his people “the magnitude” of the occasion in their language.

There were, he said, “people [in the country] who want to go back to the time when the islanders remained locked in their islands, with no [communications or transportation network].”

If the citizens wanted to have the development they desired, Nasheed said, “we have to be connected and think broadly, take ideas outside our islands, outside our atolls, and outside the borders of the Maldives.

”Today you all have heard about the death of the North Korean leader, Kim Jong Il – that is because you are connected to the outside world.”

“No sincere person” could speak out against developing the airport, Nasheed said.

“More than one million tourists visited the Maldives this year to spend their holiday on the beach – that beach is what we sell in the Maldives. But many years have passed since this airport was first built, and day by day the need to improve the airport and its services has kept increasing.”

Arriving tourists were spending in some cases over US$1000 per night for a bed, and should enter the country through an adequate airport, he said: “the tourists begin their holiday at the airport.”

Nasheed expressed surprise at the hostility to the airport development charge, noting that only a few Maldivians frequently travelled outside the country.

“Why should anyone be worried about paying US$25 to develop the airport from the money they spend on their weekend in Sri Lanka?” he asked.

He noted that the Maldives had always welcomed foreign investors, and that there was no harm in them doing so.

“The gov understands the need for foreign investment and we are aware of the role that foreign investors play in development of this country,” Nasheed said.

“A fair amount of our assets are foreign owned, even now, and today I am happy to say we are again increasing our list of assets by one with the groundbreaking ceremony we are having today.”

The new terminal is due to be completed in June 2014, and will be run by GMR under a 25 year concession agreement extendable for a further 10 years. GMR holds a 77 percent stake in the venture, with the remaining 23 percent held by Malaysian Airports Holdings Berhad (MAHB). The US$400 million project is the single largest foreign investment in the history of the Maldives.

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J Hotels and Resorts to sue government

J Hotels and Resorts intends to sue the government “at length” over the Cabinet’s decision to terminate the contract for Laamu Gan Asseyri Project, which was awarded in October.

Company chairman and former ruling party MP Abdulla Jabir said no explanation for the termination was given, and claimed it was not the first time that the Cabinet had retracted a decision.  He said he had “strong suspicions” of corrupt dealings.

“There are ruling party members who decided that they want the project, so they forced the President to terminate my contract through the Cabinet. The Cabinet is unfit to operate, it is just playing games on its high chair in the Maldives,” Jabir said.

The project was won via bidding and awarded on October 12 of this year. It includes a 50-year lease of 25 hectares for the development of hotels and 79 guest houses containing a total of 1,500 beds. Restaurants, spas and sports facilities were also included in the project plan.

Originally, a joint venture company was to be created with the government, which would earn a five percent share, and J Hotels and Resorts. State Minister for Tourism Thoyyib Mohamed was previously reported saying the government preferred a private party to develop and manage the whole project, but the ministry had a ‘Plan B’ to lease out separate components of the project to different parties.

According to the government gazette the Cabinet decided to terminate the contract on November 29, and has lately decided to re-open the bidding process.

Minister of Tourism Mariyam Zulfa was unavailable for comment, however Permanent Secretary Ahmed Solih said the ministry had sent its reply to J Hotels and emphasised that the issue now lies between the Ministry and the company.

Jabir warned that the Cabinet’s decision was one of several factors that was causing a dip in investor confidence.

“These are expensive games, for the investors and for the Maldivian people,” he said. “The government is losing credibility doing this. I am disappointed that the Maldivian government is dishonoring its agreement.”

According to Jabir, the contract between J Hotels and the Ministry of Tourism was valid under Maldivian contract law.

“We have incurred losses of income and opportunity, and our lawyer is assessing those losses now,” Jabir said, reiterating that the company plans to sue the government.

He further claims that a contract cannot be terminated unilaterally, as the Cabinet has done, and that the government cannot accept bids for a project which is the active subject of a lawsuit.

Jabir was unable to provide further details regarding losses incurred.

Last week, the Cabinet instructed the Attorney General’s Office to monitor allegations of corruption made against the government, and file defamation lawsuits where such allegations were proven unfounded.

The Cabinet’s request follows growing concern that some such allegations are being made for political purposes. Meanwhile, the acrobatics of local politics could have a detrimental effect on foreign investment.

At the same time, the government has been tasked with improving its latest ratings in Transparency International’s 2011 Corruption Perception Index (CPI), which were less than favorable.

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