Category: Business & Tourism

Maldives business news

Government inherited outstanding debts of US$446 million, says Finance Minister

The former government left a dispersed outstanding debt of US$446.5 million owed to foreign and local banks, Finance Minister Ahmed Inaz informed MPs today during Minister’s Question Time in parliament.

In response to a query by Dhivehi Qaumee Party (DQP) MP Riyaz Rasheed about the amount of loans obtained by the previous and incumbent governments, Inaz revealed that as of April 30 2011, the new administration has taken loans amounting to US$196.4 million.

“Out of that, US$5.1 million has been paid back in accordance with the agreement,” he said. “Therefore, the total dispersed outstanding amount is US$191.2 million.”

Inaz stressed that the loans of both governments were being paid on schedule “without any default.”

Outstanding debts of the previous government included a loan obtained for a fisheries project in 1979, Inaz said.

Asked by MP Abdulla Yameen – leader of minority opposition People’s Alliance – if the figures provided included receipts from sale of treasury bills, Inaz explained that “the total figures I’ve provided do not include treasury bills because the question today was about loans, which is different from securities.”

The total domestic debt in November 2008 – including T-bills issued by the former government – when the new administration took office stood at Rf809 (US$52.4 million), Inaz revealed.

“As of July, 2011, there is now Rf4.9 million (US$317,700) as total debt in T-bills,” he said, adding that parliament approved a budget with Rf1.3 billion (US$84 million) from issuance of T-bills to cover recurrent expenditure.

Inaz noted that the state budget passed by parliament in past years was structurally in deficit, with expenditure outstripping revenue: “To solve this, the tax bills proposed by the government has to be passed and I hope the honourable Majlis will solve this,” he said.

Jumhooree Party (JP) Leader Gasim Ibrahim – who as Finance Minister oversaw the expansionary fiscal policies – meanwhile asked to clarify if the total outstanding debt of the former government included foreign loans to assist victims displaced by the December 2004 Asian tsunami.

According to a UNDP paper on the Maldives’ debt sustainability published in December 2010, “as a percentage of GDP, public debt levels have almost doubled from 55 percent in 2004 to approximately 97 percent in 2010.”

“Public debt service as a percent of government revenues will more than double between 2006 and 2010 from under 15 percent to over 30 percent,” the paper noted. “The IMF [International Monetary Fund] recently classified the country as ‘at high risk’ of debt distress. From a human development perspective, the extent to which increased debt service obligations may put at risk key social and infrastructure expenditures give serious cause for concern.”

In May, 2011, the IMF warned that the Maldives “continues to suffer from large fiscal and external imbalances.”

The IMF agreed to a “medium-term” policy from the government to reduce its budget deficit “substantially”, “both through additional revenue measures – which would require the support and approval of the Majlis – and through expenditure restraint.“

“The authorities have introduced an initial voluntary separation plan for government employees and are continuing their detailed analysis of the public service, with an eye toward right-sizing government over the medium term,” the IMF noted.

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Adhaalath Party condemns Tourism Ministry’s decision over unpaid rents and fines

The religious conservative Adhaalath Party has condemned the Tourism Ministry for backing down on threats to withhold operating licenses of resorts with unpaid rent and fines.

The Tourism Ministry warned resort facilities with unpaid rents and fines to settle at least 25 percent of the outstanding amounts by July 20 or face revoking of licenses. However the ministry later decided not to follow through on the warning after at least seven out of ten resorts failed to comply within the period.

“Adhaalath Party believes that this decision made by the Tourism Ministry not to withhold the licenses will have adverse affects on society,” said the Adhaalath Party in a press statement. “It would cause the public to lose confidence in a state institute.”

Adhaalath Party claimed to have information that resorts owned by a Maldivian Democratic Party (MDP) MP and Economic Advisor to the President along with a candidate for the MDP Chairperson post were among the resorts on the list.

“This decision of the Tourism Ministry will encourage individuals and businessman not to uphold the laws,” the party said. “As a result, the state will have to face difficulties in collecting revenues owed and it is possible that it affects the domestic economy.”

The party said that it was “very irresponsible” of the Tourism Ministry to make such a decision, adding that a delegation from Adhaalath is due to meet ministry officials over the issue.

Following the Tourism Ministry’s decision, the Commissioner General of Taxation Yazeed Mohamed told newspaper Haveeru that “even if the Tourism Ministry does not take measures, MIRA will fulfill its legal responsibilities.”

MIRA is currently pursuing cases at the Civil Court against a number of tourist facilities to recover unpaid rents.

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DhiTV loses court battle for terrestrial broadcasting license

The Civil Court has ruled that the agreement made between the government and Broadcasting Maldives Pvt Ltd, the company that runs DhiTV – mentions only cable and satellite broadcasting and nothing about terrestrial broadcasting frequency.

The company had gone to court claiming the government was obligated to give them a terrestrial broadcasting frequency. DhiTV, an opposition-aligned network, currently broadcasts over cable and satellite.

Ruling on the case, Judge Maryam Nihayath said that cable, satellite and terrestrial broadcasting were three different types of broadcasting and the granting of permission for cable and satellite broadcasting did not mean that terrestrial broadcasting had to be permitted as well.

Nihayath also said the agreement made between the government and Broadcasting Maldives Pvt Ltd did not indicate that the company had been granted permission for terrestrial broadcasting, and that the rights mentioned in the agreement concerned only satellite and cable broadcasting.

Broadcasting Maldives Pvt Ltd claimed that the company needed terrestrial broadcasting permission to make the best use of the license issued by the government, and requested that the court order the state to grant permission for terrestrial broadcasting.

Concluding the verdict, Judge Nihayath said there were no grounds for the government to issue a terrestrial broadcasting frequency to Broadcasting Maldives Pvt Ltd.

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Government inviting foreigners to usurp Maldivian businesses, claims MP Muttalib

A business registration bill proposed by the government as part of its economic reform package is “a deceptive ploy” to “open up the country to foreigners”, warns MP Ibrahim Muttalib.

During today’s parliamentary debate, the Jumhooree Party (JP) MP argued that provisions in the legislation allowing foreign businesses to establish branches in the Maldives and requiring at least US$1 million as capital “proves that this bill was drafted to allow foreigners to easily do business in the Maldives.”

“Under this law, a person with US$1 million would be able to easily register a business in this country,” he explained. “Considering the state of the Maldivian people, there won’t be any businessman who has US$1 million at hand. [Foreign businesses] will be able to conduct wholesale business and sell day-to-day necessities.”

Muttalib added that local businesses that trade in footwear and garments “would not have US$1 million, except for a very few people.”

He urged MPs to consider the consequence of foreign businesses entering the footwear, garment and wholesale industry: “What is being done today is part of a neighbouring country’s efforts to open up this country for its citizens,” he said.

“The Indian government proposed opening up the service industry, tourism, travel agencies, construction, health industry, social security, financial industry, maritime travel, air travel and airplane repair under a SAFTA [South Asian Free Trade Association] agreement,” he claimed. “But because all our local industries opposed it the government has decided to do it under a law.”

While the bill specified businesses that could not be conducted by expatriates – such as fisheries, agriculture and selling commodities out of a private residence – all other kinds of businesses were “opened to foreigners” under the proposed law.

“Honourable Speaker, I do not want to live in this country as a third-class citizen,” he said.

Foreign businesses understood that a relatively small amount of capital was enough to “easily bribe officials” and secure investments such as uninhabited islands, Muttalib claimed.

According to the draft legislation, the purpose of the bill is to ensure that businesses, partnerships and cooperative societies operating in the Maldives are registered; specify what kind of businesses must be registered along with procedures for registration; and oblige businesses to submit information to the Registrar of Businesses.

MP Abdulla Mausoom of the Dhivehi Rayyithunge Party (DRP) meanwhile expressed concern that allowing foreign businesses to establish branches in the Maldives could pose challenges to local industries.

Mausoom argued that the US$1 million stipulated as a minimum capital investment for foreign businesses was too low: “All around us, whether it’s India, Celyon [Sri Lanka], Singapore, Malaysia or Africa, are looking at the Maldives; [because] their countries are saturated they are ready to do business in Maldives.

“If we open up too easily like this, [foreign] businesses will pose serious challenges to our small businesses,” he said, suggesting more restrictions to protect local industries.

MP “Reeko” Moosa Manik, acting chairperson of the ruling Maldivian Democratic Party (MDP), noted that there were numerous unregistered businesses operating in the Maldives by foreign parties.

“In the woods in some islands, especially [Laamu Atoll], there’s even an immigration department,” he said, adding that he has learned of work visas approved for ten people under the name of one person. “There’s no particular business done by these people, in sum they’re involved in all business.”

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BML records 40 percent increase in half-yearly profits

The Bank of Maldives (BML) has recorded a significant increase in operating profits of almost 40 percent in the first half of 2011, according to half-yearly results released yesterday.

Notably, the bank’s operating profits for the second quarter of 2011 were Rf 132,201,055 (US$8.57 million) in the second quarter of 2011 compared to Rf 79,872,266 (US$5.17 million) for the same period in 2010.

BML said in a statement that the total profits would be allocated to cover loan loss provisions in the second quarter of 2011. The bank will also not issue dividends to shareholders this year.

The bank also announced the launch of a business transformation programme that will see it evolve into a financial services institution “with a stronger focus on customers and service provision”.

International human resource consultancy firm Hunter Roberts, which has worked with major UK banks including Barclays, had been appointed to develop effective employee policies and provide staff development, BML said.

Speaking to Minivan News in April following his appointment, BML’s new CEO Peter Horton identified service provision as a particular area of improvement for the bank.

“I think this business grew very rapidly, not just the loan base but in terms of customers, especially if you look at what BML was 10 years ago,” he said at the time.

“That goes some way to explaining why we have such big queues in the banking hall. When I came out for my interview I took the time to walk around Male’ several times – and go in very incognito to see the BML branch. I have to experience what the customer experiences, and I don’t think that experience is what any of us want.”

Horton spent 15 years with Barclays in the UK before moving to Africa to run the bank’s corporate turnaround teams, where he became experienced in dealing with distressed portfolios and problem lending. Speaking to Minivan News in April, he identified BML’s high non-performing loan problem as a key impediment to the bank’s performance, noting that it not only had a carrying cost “but it also creates a certain mood around the business internally and externally.”

Horton also worked in the offshore finance field with a subsidiary of the Canadian Imperial Bank of Commerce in the Bahamas, and has championed the potential for the Maldives to develop an offshore finance sector.

“If you look at the world’s emerging economies, which are moving West to East, our proximity to India and to a lesser extent Sri Lanka, and with direct flights to most South-East Asian cities, should be a huge advantage for us,” he told Minivan News.

“The majority of offshore banking centres do rely on imported people and institutions. They are truly migratory these days. We are in a global economy now where things move overnight, so if you were able to do the things to attract people, it is very, very doable.

“The other thing is having sufficient protection around the business – having a strong regulator, a strong legal system, and probably some degree of monetary protection. If a private bank is bringing dollars into the country, there needs to be some degree of certainty that the dollars can sit in the country quite safely,” he said.

The Maldives Inland Revenue Authority (MIRA) has meanwhile announced a 13 percent increase in bank profit taxes collected in 2010 revenue. The country’s six banks paid Rf 226 million (US$14.65 million) in taxes, it said.

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Nexbis signals willingness to negotiate border control agreement

Mobile security system vendor Nexbis, which is behind the stalled build, operate and transfer agreement to upgrade the Maldives’ immigration system, has issued a statement welcoming the government’s decision to proceed with the project and said it is willing to negotiate the terms of the contract.

The upgrade was stalled earlier this year when the Anti-Corruption Commission (ACC) expressed concerns about the deal, claiming that there were “opportunities for corruption” during the bidding process.

“A number of further gross inaccuracies continue to be perpetrated, whether intentionally or through ignorance, particularly regarding the cost of the contract,” Nexbis said in its statement.

“Despite sensationalist claims in the media regarding [the tender process], the terms agreed to by the parties, or the suitability of the system being provided, Nexbis will be delivering a state-of-the-art, flexible and cost-effective security solution.”

Under the 20 year agreement, Nexbis levies a fee of US$2 from arriving and departing passengers in exchange for installing, maintaining and upgrading its immigration system, and a fee of US$15 for every work permit card.

“This means that neither the government nor the Maldivian public have to pay in exchange for a state-of-the-art border security protection,” Nexbis claimed.

The company said that “although the bid proposed a fee to be applied to all travellers including Maldivians”, the company waived the charges for Maldivians “as a goodwill gesture.”

“In addition Nexbis is providing a five percent revenue share to the government should passenger numbers grow. In stark contrast to some of the other bids, we have not requested a guaranteed minimum volume of passengers. Essentially the company must bear the cost risk should the number of visitors to the Maldives drop as has previously occurred during the tsunami and financial crisis.”

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

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

“Border control is not something we are unable to comprehend – it is a normal thing all over the world,” Shahid told Minivan News.

“There is no costing of the equipment Nexbis is installing – we don’t know how much it is costing to install, only how much we have to pay. We need to get everything out in the open.”

Nexbis meanwhile argues that “reasonable persons will likely realise that once the hidden costs after are taken into account and adjusted for inflation, the benefits and efficiencies of the Nexbis system will far outweigh the risk, inadequacies and uncertainties of any such alleged cheaper system.”

“This frees up the [Department of Immigration] from managing systems and securing the budget year in, year out to ensure the system is maintained. This will prevent interruption of service and avoid potential corruption as there will no longer be a need to purchase equipment every year.”

Shahid however estimates that maintaining a free system given by a donor country would cost at most several hundred thousand dollars a year, and said he was unsure as to why such an agreement had ever been signed.

“Airport charges are calculated based on government expenditure – such as the cost of the immigration counters. The US$18 collected as an airport tax is included in the ticket, and in the end [under this agreement] the amount for immigration will be going to Nexbis,” he said.

He further noted that despite Nexbis offering not to charge Maldivians for use of the service as a “goodwill gesture”, there was no mention in the contract that Maldivians would have to pay at the border: “the contract says every foreigner,” he said.

Shahid would not comment on the specifics of the pending negotiations with Nexbis, but said that the Immigration Department had the government’s full support in the matter.

Nexbis meanwhile said it had agreed to review the government’s additional requirements, “and have expressed our willingness to accommodate any such changes within commercially viable terms.”

“We have this requires some changes to the solution we ultimately provide, then it is within the scope of our agreement to accommodate these changes,” the company said.

Meanwhile, an ongoing police investigation into labour trafficking in the Maldives last week uncovered an industry worth an estimated US$123 million, eclipsing fishing (US$46 million in 2007) as the second greatest contributor of foreign currency to the Maldivian economy after tourism.

Police discovered several thousand passports confiscated from expatriate workers during a recent raid of 18 ‘paper companies’, created to fraudulently apply for work permit quotas. The imported workers, many of them illiterate and from rural Bangladesh, are then typically employed for a pittance under substandard conditions or else simply abandoned at the airport after having paid up to US$2000 to bogus recruitment agencies.

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Out on a wing: Mega bets on Chinese market

The shifting demographics of the Maldives tourism industry presents new challenges – and a great many opportunities – for the country to grow as a destination, says CEO of new Maldivian flag carrier Mega Maldives, George Weinmann, during a ceremony in Male’ this week to mark the airline’s launch of direct flights to Shanghai and Beijing.

Since its maiden flight between Gan and Hong Kong early this year, Mega has focused on the country’s booming Chinese market. Chinese visitors last year showed the highest number of arrivals over more established markets, and were widely credited with insulating the Maldives from the effects of the economic recession afflicting the UK and Europe.

Weinmann emphasises that “while the Chinese market is now the number one market for the Maldives, is still not a mature market.”

“The agents in China don’t know the Maldives as well as the European agents who have been coming here for 30 years,” he explains. “The new agents are often asking us for help finding hotel rooms, and negotiate with the hotels – it’s not really our job, we’re an airline and there’s plenty of travel agencies on both sides – but oftentimes they aren’t connected. There have been incidents in the past where certain agents get very excited and think they can just fly their guests here, only to find there are no hotel rooms for their guests.”

Without intending to become a travel agency, the airline had found itself becoming an intermediary between the Chinese tour operators and resorts, he says, many of which are still getting to grips with the unique demands of the new market.

“We talk to resorts that are suffering with occupancy, perhaps 30-40 percent,” says Mega’s Marketing Director Ali Faiz, “and see how we can help each other. We also meet with resorts that are popular with the Chinese market and offer our jet to help them sell the Maldives.”

Whereas European guests tend to stay up to two weeks at resorts, the current trip pattern for Chinese visitors is very short – “four nights, five days,” says Weinmann.

“They are much more activity focused – a little less sun and sea, a little more doing things on a boat,” he says. “Like every other market they are very food conscious – but the type of food they are looking for is different, which for instance affects how we cater for inflight meals –  although everyone likes ice-cream,” he adds.

Moreover, “as someone who has lived in China for seven years – they are huge spenders. The Chinese love to buy things. One complaint they may have with the Maldives is that there is not enough stuff to buy – they come here often with large wads of money and then go home with it. That’s an opportunity for local businessmen.”

The market is also rather risk adverse, which the fledgling airline found to its detriment in May when Hong Kong authorities issued a travel warning for the Maldives, triggered by excitable global media coverage of opposition-led protests in Male’.

“That was a near tragedy for us. We almost didn’t survive that period,” Weinmann acknowledges. “It came at the same time as changes on our side with pricing, and we almost lost the entire month of May because people who had been intending to go to the Maldives but hadn’t yet bought their tickets decided not to go.

“There was very low additional sales in May. Those people who had already bought their tickets – who had spent hundreds of dollars on rooms – couldn’t get that money back so they came anyway, and of course there were no problems. But when a warning like that goes out, anybody who has the discretion to choose not to buy, to choose somewhere else or postpone their trip, will do so. It doesn’t matter if it’s a yellow, red or black warning – it’s a huge hit. Just ask people in Thailand about what they experienced during their local turmoil. It is a roller-coaster ride in terms of bookings.”

Mega worked with resorts and the government to try and reassure visitors that the protests were limited to a few streets of the capital city – which few visitors to the country even set foot on.

“Recovery takes time,” Weinmann says. “When the incidents are over, then you have to go out and educate the market and tell all the travel agents what is going on. For a market like China that is growing as fast as it is, they do have other choices, and they are not as comfortable with the Maldives as the European market, which sees such incidents as a small bump in road.”

“We did obviously recover,” he adds, “because we launched Beijing-Shanghai a couple of months later, and that’s been very successful.”

Mega subsequently decided to introduce free cancellation insurance for every ticket, covering the first night of accommodation in the event of a delayed flight, which Weinmann explains was a way of offsetting the non-negotiable cancellation policies of many resorts in the Maldives.

“It’s one of the biggest issues in the Asian market right now,” he said. “We are competing against other Asian markets such as Bali and Thailand, and other island destinations such as Guam that are developing very fast, and in many of these countries hotels don’t have the kind of cancellation policies that exist in the Maldives. It makes it more risky for tour operators to sell the Maldives – we’re trying to eliminate that risk.”

Weinmann believes the Maldives also has room to grow existing markets, and said Mega hoped to launch flights to so-called ‘tier 2’ cities and stimulate growth in places such as Eastern Europe.

Korea also has more potential, he explained, noting that Mega would introduce a flight to Seoul in September.

“There are current five wide-body aircraft flying between Korea and Hawaii every day. That’s a nine hour flight, and the Maldives is probably a little cheaper.”

India, on the Maldives’ doorstep, was exactly two years behind China he predicts.

“But it’s a challenge that regulations prevent a Maldivian carrier flying more than 200 seats to Mumbai or Delhi. We have 250 seats, and we’d like to change that.”

Cargo imports are another growth opportunity, Weinmann says, announcing 15 discounted tickets to kickstart a trade delegation of Maldivian traders and businessmen to find opportunities in China.

“Right now all the cargo coming into the Maldives goes through Sri Lanka, Singapore or Dubai,” he explains. “Not much is produced in these locations, it’s all coming from somewhere else – a lot of it from China. We want to increase direct imports from China which should mean less cost and cheaper prices, as there will be less middlemen involved.”

Meanwhile, the airline has begun recruiting more Maldivian cabin crew, in addition to the two classes already through, and is currently training six Maldivian pilots and soon, engineering cadets. Weinmann predicts the company will employ over 100 Maldivian staff by the end of the year.

“We not doing this just because we want to, but because it’s the right thing for the airline. We think Maldives aviation can grow a lot further,” he says.

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Taxing property is “haram” in Islam, claims Salaf NGO

Religious NGO Jamiyyathul Salaf has claimed that imposing taxes on a Muslim’s property without his or her consent is haram (forbidden) in Islam.

“Without doubt, using a person’s property or profiting from the property without the consent of the owner is haram in Islam,” the NGO said today in a press release. “Only the compulsory Zakat (alms for the poor) portion can be taxed from a Muslim’s property.”

Salaf cited Surah 2:188: “And do not consume one another’s wealth unjustly or send it [in bribery] to the rulers in order that [they might aid] you [to] consume a portion of the wealth of the people in sin, while you know [it is unlawful].’’

In addition, the Salaf press statement referred to Prophet Mohamed’s (pbuh) final sermon, in which he said, “O People, just as you regard this month, this day, this city as Sacred, so regard the life and property of every Muslim as a sacred trust.  Return the goods entrusted to you to their rightful owners.”

Salaf noted that Islam protected personal property “to an extent that is not found in any other religion.”

The religious NGO contended that “formulating a law and taking people’s property whatever name it is done under is for a certainty haram.”

“Jamiyyathul Salaf would remind the Speaker of Parliament and all MPs that those who formulate such laws and those who assist them will without a doubt have to bear responsibility before Almighty Allah,” the Salaf statement warned.

It adds that there is consensus in the Islamic ummah (community) that “stealing property by compulsion with laws on taxes, duties and pension imposed on a Muslim’s property is definitely haram.”

Salaf warned that those who claimed personal property “for entertainment or as a sport” would face their old age with “no one to care for them.”

If the state believed that there was no other way to manage its finances but to “take taxes and duties from the halal income of Muslim citizens,” Salaf said that it implied “corruption and a failed economic policy” and was the sign of “a philosophy of enslavement.”

Press Secretary for the President Mohamed Zuhair observed that there were many civilised Muslim nations that had introduced direct taxation as well as import duties.

“Salaf should refer to the parliament on this issue, because the parliament cannot make any law against the tenets of Islam,” Zuhair suggested. “I believe that parliamentarians will keep to the tenets of Islam in drafting any law.”

Zuhair added that as Islam was the most modern of the three monotheistic religions, he did not believe taxation could be haram.

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Four taxation bills sent to committee

Four bills of the government’s economic reform package were sent to a parliamentary sub-committee for further review yesterday.

The four pieces of legislation would together introduce a five percent general goods and service tax (GST), an income tax, a corporate profit tax and excise import duties for most items from January 1, 2012.

All four bills received on average higher than 50 votes from the 72 MPs present and voting. To expedite the legislative process, an 11-member sub-committee was chosen to review the bills with five MPs of the ruling Maldivian Democratic Party (MDP), three MPs of the opposition Dhivehi Rayyithunge Party (DRP), Jumhooree Party (JP) Leader Gasim Ibrahim, one MP of the minority opposition People’s Alliance (PA) and Dhuvafaru MP Mohamed Zubair as an Independent MP.

Presenting the income tax bill on behalf of the government yesterday, MP Ilyas Labeeb said that the economic reform programme was now being implemented with the introduction of direct taxation in the Maldives for the first time.

“The bill I’m presenting today is the personal income tax,” he began. “Income tax will be taken from individuals whose total monthly income from their salary or other sources exceed Rf30,000 (US$1,900). The tax will be taken from income above that amount.”

All citizens and non-citizens who earn their income in the Maldives will be eligible for the tax. For naturalised citizens and residents, income earned abroad will be taxable as well.

Ilyas explained that the income tax would be progressive and divided into five tax brackets, whereby people with higher income would pay higher rates.

The tax rates are set at three percent for monthly incomes between Rf30,000 to Rf40,000; six percent for incomes between Rf60,000 and Rf100,000; nine percent for incomes between Rf100,000 and Rf150,000; and 15 percent for Rf150,000 and higher.

The legislation specifies 15 sources of income that would be considered taxable, Ilyas continued, while Zakat funds (alms for the poor), pension contributions, interest payments and capital allowance or investment would be exempt from taxation.

Individuals would meanwhile be required to submit an annual personal income tax statement.

If passed, the income tax law will come into effect on January 1, 2012.

Ilyas observed that the introduction of a 3.5 percent tourism goods and services tax (TGST) in January this year had revealed that the country’s GDP per capita was closer to US$4,060 than the previous estimate of US$2,840.

“We learned that the Maldivian economy is such that each citizen should get close to Rf5,000 (US$300) a month,” Ilyas said. “[But] the country’s wealth is shared by disproportionately few people. One in four people do not make even Rf1,000 (US$60) a month.”

Ilyas urged opposition MPs to set aside political differences “to save future generations from indebtedness.”

As a result of deficit financing by both the current and former governments through foreign loans, printing local currency and sale of T-bills, the state is in debt to the tune of Rf18 billion (US$1.4 million).

Meanwhile at a press briefing outside parliament today, DRP Leader Ahmed Thasmeen Ali said that the party gave its MPs a free whip to vote on the taxation bills.

“We cannot make a final decision without listening to what the government has to say about reducing total state expenditure and without looking into the details of the bills, such as how the money taken from the people would be spent,” he said.

The main opposition party however decided yesterday not to impose a three-line whip on proceeding with the tax bills at the committee stage, Thasmeen said.

“Our final decision will be made after the bill is accepted based on how it is shaped in the final stages,” he explained. “We will question the government during [the committee review] process and they will not get our cooperation unless they are ready to shape the bill the way we want.”

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