Category: Business & Tourism

Maldives business news

Government pursues Sri Lanka currency exchange as devaluation deadline passes

Maldivian financial authorities are reportedly in negotiations with Sri Lanka to try and establish a currency swap mechanism in an effort to stabilise the value of the rufiya against the US dollar – a move opposition MPs claim is at best, a short-term relief.

Sources linked to the country’s financial sector have told Minivan News that a deal between the Maldives Monetary Authority (MMA) and the Central Bank of Sri Lanka was “in the pipeline” in order to try and create a system for a direct exchange between the rufiya and the Sri Lankan rupee.

Mahmood Razee, the Maldives’ Economic Development Minister, did confirm that talks were taking place over a possible exchange movement with Sri Lanka, reflecting the government’s intentions to try and stabilise the local currency against high demand for the dollar.

While claiming to welcome government initiatives for economic stabilisation, a spokesperson for the opposition Dhivehi Rayithunge Party (DRP) said that although a currency exchange may provide “short-term” relief for dollar demand, the government would be required to show shrewd financial management to maintain confidence in the rufiya in the long run.

Income aims

The currency swap is the latest development in the government’s plan to boost income of foreign money that has maintained a lucrative blackmarket for the US dollar in the country. Three months ago, the government began pursuing a controversial plan to devalue the rufiya. The local currency, which was pegged at an exchange rate of 12.85 to the dollar since July 2001, was this year amended to within 20 percent of this figure to try and bridge a limited national supply of foreign money in circulation.

The devaluation stance was welcomed at the time by the International Monetary Fund (IMF), yet was domestically met with derision by opposition politicians and a week of public protests across the capital during April over fears about the resultant rises in living costs.

Despite accusing certain opposition parliamentarians of manipulating protests and media coverage for their own political gain, financial authorities requested patience for three months for the dollar demand and supply to stabilise – a deadline that passes this month.

With local news reports  claiming the local currency was trading at up to Rf16.5 to the dollar on the country’s black-market, Mahmood Razee said at the time that authorities could consider additional support measures such as currency exchanges if its stabilisation aims were not met.

While discussions are said to have been ongoing for sometime over trying to establish methods to exchange currencies with other nations, a report in the Pakistan Observer newspaper today cited Razee as claiming discussions were very much continuing between finance heads in Sri Lanka and the Maldives.

However, a source with knowledge of the discussions who wished to remain anonymous told Minivan News that “figures” at the very top level of the MMA were involved in ongoing talks with the Central Bank of Sri Lanka to provide a currency exchange system.

Talking to Minivan News today, Razee confirmed that talks were ongoing, though he said he was unsure as to what stage they had currently reached. The economic development minister claimed that although the currency exchange talks had begun before the decision to devalue the rufiya, he added that it did form part of the government’s response for trying to balance local dollar demand.

However, with the initial three-month target period to introduce economic stabilisation now passed, Razee said that he believed the finance ministry was limited at present in terms of additional support measures that could be introduced to the economy, particularly during the low-tourism season and its impact on government earnings.

“At present, I’m not so sure the Ministry of Finance will be able to undertake any urgent [new] measures to ensure stabilisation,” he said. “It would be more difficult at the moment to introduce these measures due to the low tourism season.”

Since January this year, the government had pledged to try and balance its books with a focus on generating direct revenue through the gradual introduction of taxation schemes. These schemes have included a Business Profit Tax scheduled to be launched this week for higher income enterprise and the tourism Goods and Services Tax (GST) introduced over the new year.

DRP Spokesperson Ibrahim ‘Mavota’ Shareef claimed that although the opposition party welcomed stabilisation measures from the government, it did not believe that longer-term measures had been successfully planned by authorities to bridge the dollar demand. However, Shareef said that the black market was testament to the fact that dollars did exist in the country, but that they required sufficient management to ensure they are finding their way into wider circulation.

“Any measures that encourage financial stabilisation we would welcome. This is more a national than political issue. But we do not see [stabilisation]happening yet,” he said. “If we are all spending more than we earn, especially the government, then we cannot balance the economy. These currency swaps are a short-term solution to achieve this.”

Claiming that the government had shown limited long-term measures to protect the economy, Shareef said he believed that there was a danger many local people would not want to keep savings in the form of rufiyaa as a result of “deceptive” government policy.  “When the government said that three months of the [rufiyaa float] policy would bring stabilisation people believed them,” he said.

Yet with government earnings expected to increase on the back of taxation drives, Shareef said that there were reasons to believe stabilisation was possible and that the tourism industry was a strong example of where sufficient foreign currency revenue could be generated.

“This depends though if the market is well managed. When the government first decided to manage the ruifya float [devaluing the currency against the dollar] they should have calculated the availability of foreign currency,” he said. “Dollars are clearly available on the black market and it is the duty of the government to supply them to [society].”

As such, Shareef claimed that it was therefore the government’s responsibility to have managed the devaluation “properly”, alleging that it had instead hoped for a positive outcome for finance rather than ensuring correct measures were available.

Likes(0)Dislikes(0)

Tourist facilities given 3-months to pay outstanding rent, fines

The Ministry of Tourism has warned tourist resorts, hotels and guest houses with outstanding debts to settle at least 25 percent of unpaid rent and fines by July 20, 2011 or face the revoking of licenses.

According to a statement released by the ministry Thursday, operating licenses granted by the ministry will be revoked or withheld if the overdue amounts owed to the state were not paid in full during the next three months.

“If the monies owed by July 20, 2011 is not paid in the next three months from July 12, 2011, the cases [of non-payment of rent and fines] will be forwarded to the Ministry of Finance and Treasury,” the statement said.

It adds that the resorts, hotels and guest houses with unpaid rent and fines have been informed of the government’s decision.

Local media meanwhile reported that the tourism companies owed a total of US$20 million to the government.

Tourism Ministry Deputy Director General Hassan Zameer told Minivan News today that the Maldives Inland Revenue Authority (MIRA) was responsible for tax collection and would be calculating the figure owed as of July 20.

Zameer however confirmed that the rent and fines for non-payment were owed by a total of 10 resorts.

Asked if the ministry was receiving cooperation from the tourist businesses, Zameer said that it was “hard to say they’ve been cooperating because the measure we’ve taken was of the last resort.”

The businesses were given “a final warning” on July 5, he explained, after which the cabinet decided to give a 90-day notice as stipulated in the tourism laws.

MIRA has meanwhile sued six of the companies to recover outstanding rent and fines. The cases are ongoing at the Civil Court.

According to MIRA’s quarterly report for June, a total of Rf1.2 billion (US$93 million) was collected in the second quarter, 81 percent of which were dollar receipts.

Tourism land rent, tourism goods and services tax (TGST) and tourism tax represents 23 percent, 17 percent and 16 percent respectively of total revenue.

A total of Rf521.5 million (US$40.5 million) was collected as tax revenue in the month of June.

Likes(0)Dislikes(0)

Troubled paradise: Skilled expatriates falling foul of workplace challenges

In the first of a two part article, Minivan News looks at the challenges facing skilled expatriates coming to work in the Maldives and the current systems in place to prevent both employees and employers from suffering workplace malpractice.

A growing number of expatriate workers in fields ranging from education to project management have told Minivan News they are considering leaving the Maldives, and in some cases have already left the country, amidst difficulties and desperate circumstances linked to “cultural clashes” and discrimination from local employers.

Several foreigners who have worked in the Maldives have spoken to Minivan News of the more negative experiences they have had with local employers, who they allege in cases have been “suffocating”, “scary”, and even deceptive in their treatment of expatriate staff, leading them to leave their posts prematurely and in some instances flee the country.

Statistics

Despite these claims, statistics from government organisations upholding the country’s employment act suggest that the number of official complaints from expatriates regarding their work situation were significantly less than the complaints received by local staff.

The Employment Tribunal told Minivan News that between 2009 and 2010, the proportion of complaints received from expatriates regarding poor or illegal treatment represented less than 10 percent of its total cases.

A tribunal spokesperson, who wished to remain anonymous, said that it had yet to receive a single case of alleged workplace discrimination facing foreign workers, although it accepted the practice undoubtedly occurred and that foreigners required greater recourse should they face illegal treatment in their work.

The Ministry of Human Resources, Youth and Sports, which has the Labour Relations Authority under its remit, said it had not been made aware of significant concerns among expatriates – particularly those from Europe and Asia Pacific – of widespread difficulties or a culture clash experienced working with local employers.

Senior government sources have in recent months outlined concerns about the treatment of huge numbers of unskilled labourers from countries like Bangladesh that are often illegally trafficked into the country, though skilled workers from abroad also appear to have issues with work practice.

While the number of expatriate staff complaints is statistically limited in comparison to the number of concerns received from local employees, foreigners who have sought career development in the Maldives have raised concerns about a pattern of experiences they fear others may face.

One Australian teacher, who spent a year at an international school in the Maldives, found that after years of working across Asia the Maldives was the most “personally challenging”.

The teacher said that while not regretting his experiences in the Maldives, there was very little information on what workers should expect and a seeming lack of interest and acceptance of the foreign experience he had been employed to provide.

“I found work in the Maldives extremely challenging from the point of view of trying to initiate and foster an ‘international education’, with huge limits being put on what could be facilitated in the classroom in terms of curriculum and content – mostly due to ‘culture clashes’,” he said.

“I found many levels, from management, staff and the local community down to students themselves, very unyielding in accommodating ‘international quality teaching and learning’.”

Although working in a very different industry, one UK expatriate – employed for several months as a project coordinator for a high-profile reclamation and construction project before opting to leave the country and her job – said she felt her position was ultimately untenable and that she had put too much faith in the word of her employer before arriving in the Maldives.

“The owner informed me that I should not compare myself to other expatriates from Europe and that expats should work weekends and holidays as they do not have a social life,” she claimed.

“My advice to anyone moving to the Maldives would be to make sure you have a contract that is legally recognised in the country, including the provision of allowances, medical insurance and a job description before you commit. Promises can turn to dust and someone’s word is not necessarily their bond.”

Another employee from the UK, bought to the country to work as a travel journalist and writer after several years working in the Middle East, claimed that she was also unprepared for office life in the Maldives. The employee said her employer led her to feel powerless from treatment she believed amounted to bullying.

“[I] began to feel I was being watched at every step at work. Despite there being one rule for Maldivian staff – keeping whatever hours they pleased, turning up in the afternoon and going to meetings through the day – they brought in a performance management system especially for me, increasing my workload and making me work six days a week,” she said.

Speaking to Minivan News, a representative for the Maldives Employment Tribunal – formed in 2008 to ensure companies were fulfilling their obligations to the country’s labour laws – said that the Maldivian Employment Act was designed to protect both local and foreign workforces equally.

However, the tribunal spokesperson added that the formation of a special union or workers’ associations to protect the interests of foreign employees would no doubt be beneficial to foreign staff, particularly those not fluent in Dhivehi or English.

“If there is a union that can represent foreigners on their behalf, or a workers’ association or something that can represent [foreign workers], then it will be easier to give them access to the tribunal,” the spokesperson said.

According to the tribunal’s figures, in 2009 a mere eight percent of complaints received regarding workplace mistreatment were from expatriate workers, despite these workers constituting a third of the country’s population. In 2010, this figure halved to four percent.

No enforcement

At present, employers in the Maldives are not bound by decisions of the tribunal even if they were found to have breached their contractual or legal obligations, the spokesperson said.

The tribunal is awaiting changes to the Employment Act that will allow edicts to be legally enforced by the country’s Civil Court. A true reflection of of the number of disgruntled foreign employees was likely to follow, the spokesperson said.

“The tribunal itself and the Employment Act is silent on enforcement, so if we issue a verdict and no one enforces it, there is nothing we can do on this,” the spokesperson said.

“Maybe this is why people do not want to go through the hassle of [the tribunal]. If the decision is not implemented, what do they get at the end of the day? We have proposed the Employment Ministry amend the act so that enforcement power could be given to the Civil Court. But these amendments are still going on.”

Local considerations

The tribunal spokesperson said that there was little difference in the standard and type of complaints coming from either local or foreign employees, with few cases concerning discrimination.

“We normally get complaints about unpaid wages and unfair dismissal so it’s sort of the same. It’s basically unfair dismissal and unpaid wage that we receive, even from locals. We get very few cases of discrimination,” the spokesperson claimed.

The tribunal had not dealt with cases such as forced labour or discriminatory behavior from employers, she said, “although this does not mean it is not taking place fairly openly.”

“I think it is all happening in the country, even if we do not receive such cases. Anybody who in this society knows it is happening in the country,” the spokesperson added, emphasising that employment laws were nonetheless designed to treat local and foreign workers equally regardless of their nationality.

Foreign workers in their own words

Three expatriate employees who have all moved on from their posts recount their experiences of working in the country. The names of the individuals have been changed to protect their identities.

Michael, 28, Australian teacher

“I found working in the Maldives to be a thoroughly challenging, but rewarding experience. Unlike other regions of the world, which provide you with a plethora of websites, books and other resources to enhance your knowledge of what the country will be like to live and work in, there was little to go on before leaving – apart from the Lonely Planet guide (which is more of a resort guide than a window into the inner workings of the country itself).

So going there I had little idea of what living and working in the Maldives would be like. Early challenges included the ‘norm’ for ex-pat life abroad – finding suitable accommodation, getting acquainted with new work conditions and new colleagues, finding friends and generally finding your feet in a new place. I lived in Hulhumale’, which is a swift ferry ride away from the capital city of Male’ – this provided the quiet I desired, but I was close enough to experience Male’ when I had to or wanted to.

I was employed as an English teacher at an international school, which is my profession in my home country. I found work in the Maldives extremely challenging from the point of view of trying to initiate and foster an “international education”, with huge limits being put on what could be facilitated in the classroom in terms of curriculum and content – mostly due to ‘culture clashes’.

I found many levels, from management, students themselves, staff, down to the local community, very unyielding in accommodating “international quality teaching and learning”. To me this is what an international school should provide – opportunities for students to develop holistically and develop critical thinking skills, with an empathy and understanding for different cultures and lifestyles.

The culture of the Maldives and its unwillingness to broaden its horizons and be open to outside influences made school life extremely challenging, not to mention the management of the school ( European in origin) not being open to “local interests and desires” for a child’s education.

The Maldives can also be quite a ‘suffocating’ place, especially for foreign women – Maldivian males are quite primitive in some of their behaviour and I have both witnessed and heard of gross misconduct and harassment on many levels towards Western women. As a male, the country is without doubt an easier beast to handle, but foreign women definitely have cause for concern when dealing with locals at times.

On the whole, once settling into a vastly different style of ex-pat life that I had been used to, I really enjoyed living and working in the Maldives. It is quite a shock to begin with, with rigid cultural and religious elements, quite foreign to many western day-to-day lives, having to be adhered to.

Outside of work there is plenty to do if you have a thirst for everything outdoors. I wouldn’t trade my year there for anything, I met some wonderful people – both local and international, and would recommend people give the Maldives a go.”

Natalie, 47, British project coordinator

“Recruited by a Sri Lankan businessman in the UK to work as a project coordinator in the Maldives, I was very excited about finding what seemed to be an excellent opportunity for my career development, working on a reclamation and construction project.

Having thoroughly researched the UK company, I accepted the job offer to work for the newly established Maldivian company, set up specifically for the project. With what I understood to be tight project timescales, I relocated within a month having the draft of a skeleton contract in email, trusting the owner of the business that the company and its employees were like a family; we could finalise the details of the contract at a later date.

Once there the owner informed me that I should not compare myself to other expatriates from Europe and that expats should work weekends and holidays as they do not have a social life. My advice to anyone moving to the Maldives would be to make sure you have a contract that is legally recognised in the Maldives, including allowances, medical insurance and a job description before you commit. Promises can turn to dust and someone’s word is not necessarily their bond.

Life in the capital of Male’ for a woman is not an easy one. Despite respecting the culture and religious beliefs, wearing suitable clothing and behaving appropriately, the Maldivian men do touch and grab women inappropriately.

There is a great deal of resentment from some Maldivians towards expats and contractors from Europe and the Americas. Fortunately though, some recognise the potential for change to achieve future growth and prosperity in a greener and more international culture.

My experience is something I do not regret. I had the pleasure of meeting His Excellency the President on more than one occasion and was fortunate to make good friends and business associates. Lessons have been learned: such is life.”

Dana, 30, UK journalist

“I have lived and worked on respected publications in the Middle East, I was used to cultural differences and striking harmony between the two ways of working. I believed I was well prepared for the challenges of working in a society with similar beliefs to the Maldives, but nothing prepared me for the challenges that lay ahead.

I was at first pleasantly surprised with the apartment where I would be living. It was a three-bedroom flat with all mod-cons. Upon arriving, the publisher asked me which room I wanted to take and then proceeded to lock the other rooms, he retained a key for the flat and left.

The next morning, for my first day at work I had a rude awakening. The office boy who had collected my luggage was standing above me saying “madam, madam wake up!” Frightened out of my mind, I screamed at him to get out of my room. It was a strange and scary start to the day.

Any newsroom is supposed to be buzzing with reporters going in and out the office and colleagues coming in and out. Instead the publisher wanted it to be like a factory, rehashing press releases. He even had the general manager prepare us job descriptions, though it was clear that he hadn’t the first clue about journalism and was contending with staff with more than five decades of media experience between them.

Increasingly I also began to feel I was being watched at every step at work. Despite there being one rule for Maldivian staff, keeping whatever hours they pleased, turning up in the afternoon and going to meetings through the day, they brought in a performance management system for me, increasing my workload and making me work six days a week.

The office itself was dangerous and there were no health and safety regulations. The unlit entrance to the office had live cables swinging above the off the stairs and water on the bathroom floor. A campaign to bring it up to safe standards fell on deaf ears.

The general manager took me aside and tried to blacken the names of my colleagues, telling me they were not acting professionally in his eyes, but that he liked them and would give them more chances to improve.

Why was he telling me this I thought? I didn’t want to get involved, being such a newbie. Then he tried insinuate if I played by the rules I would do well. I didn’t like his tone or his allusions. It was as if he was trying to see what side I was on and divide and conquer. Baffled, I said that my colleagues had showed me nothing but kindness and respect and I didn’t want to be part of anything he was insinuating. I felt really uncomfortable with all of this.

I told my colleagues about his strange behaviour and bribes. They said they were not surprised. At various times he had tried the tactic with them all.

This alarmed me. Understandably at this point I was scared because I did not know what I had got in to. I only took the job because I thought this was an opportunity to further develop myself after my Middle East experience. I didn’t have the resources to move on.

Strangely, there was another power struggle going on between the publisher and the GM, who used to turn up late in the afternoon. Overall their attitude was arrogant and disdainful towards us and they showed no recognition for how hard the staff had been working to make their product
a success. Morale was so low in the office and all the energy and enthusiasm I had brought with me was being sapped. I felt I had served a lifetime, though barely a week had gone by.

There was a clocking in machine and we were required to clock in between 9am and 5pm and soon our interviews were being classed as time out by the publisher and his minion. I couldn’t believe their method of thinking!

We had contacts begging us to go out and visit them, yet we were ‘trapped inside the office.’ We tried everything to convince the publisher in the value of letting us out of the office. Yet he turned it into a punishment, banning press trips from the second week.

The day after Halloween, I received a phone call from my colleague who said she had just been fired. I was running late into the office from a meeting, so I couldn’t quite process it, she said that she had not been given any reason for the dismissal. My editor and the other reporter were in the office when I arrived and you could cut the atmosphere with a knife. It was such an awful morning. My macabre mood suited the topic of my writings that day a feature about ghouls and jinnis of the Maldives for a Halloween special.

We met outside for lunch and one of the reporters revealed that he was tendering his resignation on principle. The editor said he was looking for other jobs abroad but he would need to stay in this job for as long as possible. I felt for them and for the nightmare struggle they must have had so far. I felt suicidal after a few weeks, how about these poor souls?

I began to feel increasingly fearful as I did not want lose my job and have to go home. Not after all the struggle to get here. All those hours spent working in three menial jobs back to back, and taking on limited freelance contracts over the summer just to manage the airfare to the Maldives. I had no option, I was trapped, without enough money to go forward or back.

A few days later all hell broke loose. First the reporter who had tendered his resignation was called in and told that he was going to be dismissed that day, even though he was owed 30 days notice.

Then the editor was called in – luckily he had also just written his notice and handed it in before he could have the satisfaction of dismissing him. Two bully security guards were called in to almost forcibly remove them. I was so upset and shocked by the whole events which were unfolding. It was all going too fast – I couldn’t compute.

My state of mind was in tatters at this point imagining the worst, wrestling with my conscience, my pride and my dignity. My home was part of the work package so could not leave the company and try to find another job.

I didn’t have a choice. At this stage still hadn’t even been paid. I was also running out of cash and there was no one to help back home.

So I stayed… but at this point I still hadn’t even received my visa, and was required to leave the country and go to Sri Lanka. Still with no money, I asked the publisher to pay my expenses, but he said he would only pay for the airfare. I asked for an allowance to spend but he refused. Instead he turned out his moth-eaten wallet with £5 GBP and 15 rupees he said I could exchange.

In the meantime my colleagues had an awful time of it having to shift from place to place, but with the help of friends they got by and began setting up their own plans for the future. I tried to support them where I could.

Then I was called into the office and the publisher said he had been told that someone was else living in the flat and there were people visiting me. So what? I felt violated and angry as he had just admitted he been watching my flat. He said that he needed to give permission for anyone to stay. Another control mechanism.

The wheels were already in motion for my own removal. My visa was still in the process of being arranged and they had my passport. Less than 10 days later my fears were realised. I was called into the office and told that they would no longer continue with my employment and when I asked about my passport I was told I had to go to the immigration building to collect it.

I called one of my friends who had contact with immigration and I was told to come down to the office, they had my passport and tickets for me to fly out with Qatar within two days. I filed a case
with the employment tribunal and got my passport back.

The employment tribunal was a long and arduous process and in the end they ruled against me, as I hadn’t worked there long enough so I could not receive any compensation for the trauma of the last few months. Despite a ruling by the court to issue a one way ticket to the country of my choosing, I still have to receive that ticket from the employer. Along the way he pulled all sorts of nasty tricks including putting holds on empty tickets so that he would look good in court, and gazumping me when I went to buy a ticket at the same travel agent.

Overall, I felt an overwhelming feeling of freedom. I want to help people from making the same mistakes as me.”

Likes(0)Dislikes(0)

Aviation authorities await seaplane crash report before considering safety review

The Civil Aviation Department has said that it will wait to complete an investigation into the crash landing of a Trans Maldivian Airways (TMA) seaplane near Biyaadhoo Island Resort during a training flight this morning, before considering amendments to flight policy in the country.

The aviation body’s Director General, Hussein Jaleel, confirmed to Minivan News today that no injuries were reported to the two pilots involved in the crash – reported to be the only people on board at the time. The spokesperson said that investigators currently believed the crash had resulted only in structural damage to the seaplane after it came down near an assigned landing point in a reef by the South Male’ Atoll resort.

Jaleel said that he was presently unable to presently reveal many details about the collision, other than that the Civil Aviation Department’s Accident Investigation Committee were now interviewing the pilots involved in the flight as part of ongoing investigations into a possible cause of the crash landing.

An official spokesperson for TMA – which is one of the country’s two largest operators of seaplane services along with Maldivian Air Taxis – was unavailable for comment when contacted by Minivan News at the time of going to press.

However, in terms of the possible need to implement changes in regulation or seaplane policy following the crash, Hussein Jaleel said authorities would wait for investigations to be completed on today’s incident before making any changes. “However, if it is revealed that new policies are required we would ensure we did this,” he added.

Seaplane incidents

When asked about the number of incidents investigated in relation to the country’s seaplane operations from the start of this year, Jaleel said he did not have the exact figures on him at the time of going to press as aviation authorities investigated incidents of varying severity in the course of their work.

However, the aviation department director general told Minivan News that in terms of events like a crash landing, this was believed to be the first case of such an incident occurring in 2011.

Back in December 2010, the Civil Aviation Department confirmed that a collision had occurred between a Maldivian Air Taxi seaplane and another aircraft at Male’ International Airport that resulted in no injuries or major damage being recorded.

Authorities said at the time that investigators had found the collision to be a minor accident involving the wingtip of an aircraft colliding with another craft, an event which was not seen as “a major safety concern” for future operations.

Likes(0)Dislikes(0)

MIRA concedes profit tax challenges following door-to-door push

The Maldives Inland Revenue Authority (MIRA) has taken a door-to-door approach in trying to prepare Maldivian enterprises for the introduction of a new Business Profit Tax (BPT) that comes into effect on July 18.  MIRA says informing and registering every national enterprise in the country under the scheme will be a considerable challenge.

The BPT is to be charged to all businesses operating in the Maldives,that makes a profit  of more then Rf500,000 (US $32,425).  The tax will be a first for companies operating in the Maldives, a country that launched a similar 3.5 percent Tourism Goods and Services Tax on all travel industry income as of January 1 this year.

Business owners and industry representatives, while said to generally welcome direct revenue in the country, have called for a gradual introduction of financial reforms like the BPT, which are being sought by the government to balance national budget deficits and protect smaller enterprises.

Under the present BPT system,  businesses that make a profit of more than Rf500,000 (US$32,425) will be asked to pay 15 percent of their earnings to the state.  This sum will effectively rule out small businesses operated by individuals and places  like corner shops that mainly caters to the local residents from having to pay BPT.

Moomina Abdul Sattar, 49, who runs a small tailor service, is one such businesswoman.

“I don’t have to pay the BPT tax; it is applicable only for those who make a profit of more than Mrf 30,000 (US $ 1945) a month,” she said.

Sattar added that she had previously attended an information session held by MIRA and was not therefore concerned about the tax as it does not affect her operations.

“My income per month is around Mrf 15,000 (US $ 973), from this I have to pay the salary of my three tailors,” she said.

Nonetheless, Sattar added that she still wasn’t aware that registration of her business was required by MIRA, even after attending the meeting.

For other businesses in the country, beyond the registration process itself, BPT is still expected to provide a significant challenge, at least in the short-term.

“We are not fully ready for BPT, but we are taking it positively,” said Ibrahim Hameez, Managing Director of Ryan Pvt Ltd. A design consultancy firm, Ryan has about 40 employees and would be seen as a medium and growing business.

“A lot of things that affect businesses were introduced this year, pension scheme, BPT, Income tax,” he said.

Hameez added that it was the timing of the introduction of taxes that posed a problem. “If we had known one year in advance, it would have been better. At the end of last year, we had not foreseen and planned for all these expenses in our cash flow for this year.”

The BPT Act was published in the government Gazette on 18th January, with the tax to come into effect 6 months from the date of publication.

Despite the problem of timing Hameez believes taxation is a good thing.  “BPT is going to be tough to adjust to, but we can and we will.”

Business of all sizes

As part of the act’s requirements, businesses of all sizes, including small and medium enterpises have to be registered with MIRA. This is a first for the Maldives, where small businesses run from home have generally not had to register themselves in the country.  

MIRA says they are having great success in their door to door campaign to spread awareness.

“The response from the public has exceeded our expectations, people are very cooperative and even fill up the forms for registration on the spot most of the time” said Fathimath Rasheeda, Director of Tax Payer Education and Facilities for MIRA.

 Landlords had also previously been exempt from having to register their operations or interests.  It is these type of earners that Rasheeda has said have been the target audience for its door-to-door campaign.

“As a society we don’t tend to think that renting places, giving tuition, or selling sliced arecanuts are doing businesses,” she said.

Until this month, individuals or partnerships running small businesses like making short eats or cakes from their homes had only been required to get permission from the Ministry of Health to operate.  Similarly, anyone renting accommodation, no matter the size, had not been required to register their property unless the place in question was to be used as a shop.

“Even a person renting out one room for Mrf 2000 (US $130) or teaching a small Quran class should register. But we will be taxing only those who earn more than 500,000 (US $ 32425) annually as profit,” said Rasheeda.

 

Challenges and Penalties

Alongside businesses, MIRA also has its own concerns over such a large scale operation being conducted for the first time.

“This is a big challenge for us also, as this is the first time a lot of businesses in Maldives would be registered,” she said.

MIRA’s 70 staff will be participating in an awareness campaign set for next Saturday. While next week the campaign will be taken to the islands.

“Due to lack of resources we cannot cover all the islands, but the city and island councils have been very helpful and have helped register the businesses in the islands,” Rasheeda added.

Among the challenges faced by MIRA will be taxing businesses that had never before declared their revenues publicly.

In addressing this potential difficulty, Rasheeda added that the BPT would operate like taxation systems in most other countries, where “individuals and businesses have to declare on their own the profits they make.”

The audit department of MIRA is expected to conduct a risk analysis to prioritize the first businesses it will audit to ensure the system is being adhered to.

“We hope to audit all the businesses within a five year period.  Those businesses and individuals eligible to pay taxes will be asked to file a tax return annually,” Rasheeda added.

The penalties for enterprises omitting or filing false tax returns will include fines of up to Rf100,000 (US$6,485), six months to two years of house arrest and imprisonment or banishment, as per the BPT act.  Rasheeda added that “if businesses or individuals fail to pay their taxes, aside from the wide ranging penalties, we can also seize their property in order to get the amount owed to the authority.”

Likes(0)Dislikes(0)

Addu council looking beyond single island resort model for mid-market push

Addu City Council has announced plans to kick-start a project aimed at attracting mid-market tourism to the region in a change of policy from the country’s established one resort per island policy.

Following in the footsteps of developments on the island of Gan in Laamu Atoll, Addu City authorities have said they will develop areas of the city as a Asseyri (Beachside) Project.

The project represents a tourism development plan by which guest accommodation, alongside recreation and entertainment facilities, will be developed in a specific area with each commercial component being rented out to different parties. The system differs from the country’s established tourism model that has generally been based on a single enterprise operating a resort property exclusively on a designated island.

The announcement of the Addu City project follows a cabinet decision made earlier this year to create an integrated tourism development policy.

“We have identified the areas we want to develop for the Asseyri project, and we have sent the proposals to the Tourism Ministry for approval,” says Abdullah Sodiq, Mayor of Addu City.

The two areas ear-marked for development under this project are the Maafishi Area of Hulhumeedhoo Island and the start of the Hankede area, Hithadhoo.

Diversification

Moving away from the existing one island, one hotel tourism product, an Asseyri project aims to open up venues to allow larger numbers of local entrepreneurs to participate in the Maldives’ lucrative tourism sector.

The project will also open up doors for budget and mid-market tourists to visit Maldives, diversifying the Maldivian tourism product, according to developers.

A pilot Asseyri project was launched by the Tourism Minister Dr Mariyam Zulfa in Gan in March. According to the proposed plans, two 300 bed hotels, 69 guest houses, as well as a number of restaurants, spas and sports/recreational facilities will be developed on the 25 hectares of land located on the western beach side of the island.

In trying to emulate the Gan project, Mayor Sodiq said “the Addu Assyeri project will also be a multi-owner project; with lodgings and other facilities like restaurants, spas and sports areas each being owned by a different enterprises.”

The proposals for the Addu project have now reportedly been drawn up and sent to the ministry for approval.

“The tourism ministry shared with us the details of their ongoing project at Gan and has been very supportive of our maiden venture into this area,” Sodiq said.

Addu City Council hopes the project will give a boost to the local economy by creating more job opportunities and helping with aims to increase the GDP of Addu Atoll within the next three years. It will also attract more visitors to the city which is already home to properties like Shangri-La’s Villingili Resort and Spa.

Finding developers

Tourism authorities in the country have also pledged to try and assist the Addu City beach-side developments.

“We are holding discussions with Addu City Council to plan their Asseyri project,” says Moosa Zameer Hassan, Deputy Director General at the Planning Department of the Ministry of Tourism, Arts and Culture.

Hassan added that the Tourism Ministry was currently working to change its approach to the Gan Asseyri project after evaluating project proposals that were submitted ahead of a June deadline.

“We received two proposals, one from a local company to do the water and sanitation component of [the project], the other from a foreign company to develop the hotel component. At present we are negotiating with both parties,” Hassan said. The initial idea for the project was to try and find a party interested in the total development of the whole area and to lease out the different components of it afterwards, though tourism authorities are now reviewing this.

“The area is very big that might be the reason [for the review]. So now we are going to put out a tender for the development of hotels and guest houses, and hold discussions with the local council for them to rent out the land plots for other components of the project like restaurants, spas, recreational facilities and such,” Hassan claimed.

Aslam Moosa, a representative for Gan Island Council said he and his fellow members had been kept in the dark regarding the project.

“Yes, I have seen the area marked on the map, and heard the announcement for the proposals, but nobody has held discussions with us on the project,” he added. Moosa claimed that the council was presently only involved in the development of a 300 bed hotel by an Indian Company in Gan.

Hassan confirmed that discussions have not been held since local councils were elected. in February. “But we hope to hold discussions with them and to be able to rent out plots of land within two months,” he said.

While the tender for hotels would be open to foreign parties, bidding for running guest houses will be only for locals, Hassan stressed.

“Guest houses have always been protected investments just for locals. By law, the Tourism Ministry’s involvement is vital as guest houses and hotels can only be leased by them. The ministry does not envisage giving priority to residents of the Atolls involved,” he said. “Bidding for guest accommodation will be a process open to all Maldivians. Though local councils can decide if they will prioritise residents of their island in the bidding for involvement in other components of the project.”

Meanwhile, Addu City Council has said it is finishing up the administrative work for the Asseyri project and would soon be drawing up the final plans.

“We are very confident that our proposed plan will be approved by the ministry. It will be well regulated, we will assign land areas and have a limit on the height of the buildings.”

The tentative date to complete the tender for the Addu Asseyri project is by September. However, Sodig says actual physical work on the project will be put off until December, to enable the scheduled 17th South Asian Association for Regional Cooperation (SAARC) summit to go without any hitches.

Likes(0)Dislikes(0)

Industry seeks “grace period” for overhauling employee living conditions

Business organisations and labour rights groups have called on the government for more time to address proposed amendments to the Employment Act that will drastically shake up living standards for foreign and local workers employed within the Maldives.

The Ministry of Human Resources, Youth and Sports has today invited comments on the new proposals requiring all employers within the country to ensure that specific standards of living quarters are being provided to staff such as those living on resorts or construction sites.

The proposed amendments to the Employment Act outline new requirements for staff accommodation that include providing a clear separation of work and private space, sufficient artificial or natural light, purpose built kitchen areas and specific health and safety standards.

From the perspective of employers, Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), said that despite certain negative perceptions of the industry over treatment of its workers, beyond a few bad examples, there was a willingness to improve treatment of staff.

“Any improvement [to worker’s living conditions] we would welcome. Yet, with any improvements there is a cost attached to this,” he said.

Speaking to Minivan News, Janah said that he believed that the proposed amendments to workers’ living conditions would impact on the cost of construction work in the Maldives.  He said implementing such living standard changes would therefore require a grace period of around one year to allow businesses and their customers to adapt to the changes.

The MACI president claimed that in an already highly competitive marketplace,  society, rather than the construction industry alone, would have to accept some of the financial burden to offset the higher costs of accommodating workers to the standard proposed by the Human Resources Ministry.

“This will definitely have an impact on proposed costs in the industry. Right now, in what is currently a competitive market. We are just managing to get through the economic situation,” he said.

Alongside the Employment Act regulations, Janah said that he believed that additional legislation relating to occupational health and safety was needed to be addressed both in terms of private and government contracts – an issue he claimed was not always the case in negotiations for a construction project.

“The Maldives building code and health and safety requirements also need to be addressed along with these amendments,” he added.

Taking the example of what he believed were differences between the present and previous governments, the MACI president claimed that the implementation of a more structured national budget had meant that state building contracts were no longer a sure thing for building groups. These changes within the construction market were therefore seen as putting further pressure on building firms to try and cut costs while providing new residences for staff.

“[The accommodation proposals] are a good move, but there needs to be time for the industry to adapt,” Janah claimed. “There is awareness of the new requirements that needs to be created. I don’t believe penalizing companies would be the best practice and that a grace period of around a year would be a good time frame to address [the changes].”

Tourism workers

From a tourism industry perspective, worker’s organisations like the Tourism Employees Association of Maldives (TEAM) have criticised the decision to give just 15 days to provide feedback to the regulations proposed by the Human Resources Ministry.

TEAM President Ahmed Shihaam said that the association would be discussing its responses to the changes in accommodation within the next 24 hours, though had hoped the group would also have time to consult with tourism industry employers as well.

Shihaam claimed that a 15 day time-frame to respond to the regulations made it difficult to consult with important stakeholders like resort employers on the long-term implications of the proposals.

“Rather than days, we may need a month or so to address these issues properly, both with our members and the employers [the resorts themselves],” he said. “This is new to us all and the intention is not to make enemies.”

The Maldives Association of Tourism Industry (MATI), which represents a number of resort businesses operating in the country was unavailable for comment when contacted by Minivan News at the time of going to press.

In addressing the proposals for the Employment Act, Human Resources Minister Hassan Latheef said that the proposed new accommodation standards had been adapted from recommendations outlined by the International Labour Ogranisation (ILO), specifically in terms of sanitation conditions and room size.

Latheef claimed that the proposals would address many of the complaints and concerns received by the country’s Labour Relations Authority from Maldivian Workers concerning the conditions of their accomadation, particularly at resort level.
“Maldivians, rarely complain on the pursuit of [unpaid] salaries, most of the time, they complain about the conditions at work or their living conditions. Most of the complaints I should say come from resort workers,” he said. “Their complaints come from not being paid a service charge they are entitled to, to conditions of their accommodation and alleged discrimination from senior management.”

By comparison, Latheef claimed that about 95 percent of complaints received by the Labour Relations Authority from expatriate workers related to the alleged failure of an employer to pay their wages rather than living conditions.

Accommodation amendments

The proposals opened up to public consultation by the Ministry of Human Resources, Youth and Sports are scheduled to come into force four months after being published in the government gazette.

These requirements include:

  • Lodging should provide shelter from the natural elements, and be constructed using suitable materials
  • If a lodging is based at a work site, there should be a fence separating these two area at a distance of 1.5 metres
  • At entrance of lodging, a service provider’s name and contact number should be displayed along with the maximum number of people that can be accommodated
  • Lodgings should have enough daylight or artificial light as well as a means of letting air pass through
  • A single worker’s accommodation should equate to 6 square metres of living space at a height of 2.4 metres and an all round width of 1.8 metres
  • For 2 people sharing accommodation, there should 9 square metres of space that is 2.4 metres in height and 2.1 metres in width – each extra person after that should be supplied with 4.5 square metres of living space, 2.4 metres in height with a width of 2.1 metres
  • Rooms should be for separated by gender, unless workers are married
  • Lodgers should also have a means of locking away valuables
  • A toilet should be provided for every 10 people staying at a lodging
  • A sewerage system should be in place and constructed with permission from the relevant authorities
  • A kitchen should be supplied that is appropriate for the surroundings, while it’s forbidden to cook inside lodgings at construction sites
  • Employers or the service provider will be fined up to Rf5,000 for each failure of regulation that is recorded

More information on the measures can be found on the Ministry of Human Resources, Youth and Sports’ website.

Likes(0)Dislikes(0)

Foreign investors need “one-stop shop” to navigate Maldives bureaucracy: MNCCI

Local trade authorities must do more to simplify foreign investment procedures in the country as they attempt to increase income of dollar revenue, the Maldives National Chamber of Commerce and Industries (MNCCI) has claimed.

Ahmed Adheeb, an MNCCI member and Chief Operating Officer of the Millennium Capital Management (MCM) investment group, said he believed the country was failing to follow in the footsteps of markets like Sri Lanka by establishing a board of investment to help foreign companies navigate the complexities of local business culture.

“In order for the Maldives to build investor confidence I believe that firstly we need a board of investment like they have in Sri Lanka,” he said. “The Maldives has many different ministries that must be navigated to get licenses [to operate businesses]. We need a one-stop shop [for foreign business] if we are to bring international investors into different areas.”

Adheeb’s comments were made after members of the MNCCI recently met with their Pakistani counterparts in Male’ to discuss business and investment opportunities across the Maldives. Although no specific areas of interest for local investment were raised as yet during the meetings, Adheeb claimed that recommendations were made regarding potential opportunities for putting money into smaller and medium size tourism developments like guesthouses and safari boats.

The MNCCI said that it also acknowledged requests from the Pakistani representatives to host a single country forum here in Maldives to promote bringing certain food and pharmaceutical products to local markets.

With growing fears over the lack US dollars currently being circulated in the Maldives, generating additional foreign currency revenues has been identified as a key part of the government’s economic stabilisation strategy.

While calling for simplified investment procedures for businesses coming to the Maldives, Adheeb claimed that he hoped to see protection measures for local small and medium enterprises in the country.   One such example was in potentially setting caps on the minimum size of investments that could be made by foreign parties in the country.

“We should try to ensure that we are not endangering existing local small and medium enterprises,” he added.

However, amidst ongoing attempts by the government to try and devalue the rufiya to try and stabilise the Maldivian economy – under pressure from bodies such as the International Monetary Fund (IMF) – Economic Development Minister Mahmoud Razee claimed that recent financial uncertainties has not significantly impacted potential foreign investment in the Maldives.

“Generally the interest is still there. In the development of Hanimaadhoo for example we have seen 19 groups expressing interest in the project. Ten of these [parties] were foreign investors,” he said.

Razee claimed that he did not believe that recent financial upheaval in the country including fears over a shortage of US dollars finding their way into the local economy had not led to cases of “specific hesitation” from enterprises looking to invest in the country.

“Obviously [the country’s finances] are something investors will be looking into, but we believe this is not a significant setback as a result,” he added.

Razee said that the government had expressed interest in working with foreign business to develop national agriculture and aquaculture, as well as transport infrastructure.

President Mohamed Nasheed had stated last year that private sector investment was expected to bring US$1 billion to the local economy between 2010 and 2013.

However, aside from issues of financial stability, a former Australian Supreme Court Justice who spent several weeks in the Maldives this year analysing the functioning and impartiality of the country’s judiciary said that he believed legal reform had a key impact on economic performance.

After reporting that the Judicial Services Commission (JSC) – designed to serve as a legal watchdog – was compromising its accountability and obstructing the creation of an independent judiciary, Murray Kellam claimed that an impartial judicial system was a key factor in encouraging foreign investment.

Kellam said that Singapore was a perfect example of the long-term financial transformations possible with focused and impartial legal reform.

“[Singapore] understood the value of a civil system that is incorruptible and competent. They spent a lot of money on their judiciary and Transparency International now rates their civil legal system as one of the best in the world,” he told Minivan News in March this year.

“Singapore realised that one of the best ways to attract investment was to have a system whereby international investors knew they would get a fair go in domestic courts. If you look at the circumstances in other parts of the world where investors have no confidence in the judiciary, that deters investment and takes it offshore. They’ll go somewhere else.”

Likes(0)Dislikes(0)

Uncertainty remains over scale of Maldives piracy threat

With two separate attacks this month by Somalian pirates within a 30 nautical miles of Trivandrum, India, one maritime expert has warned that the Maldives’ growing use as crossroads for shipping routes make its own waters and businesses an increasingly attractive target in the future.

Tim Hart, a security analyst specialising in piracy from around the Horn of Africa for Maritime and Underwater Security Consultants (MUSC), told Minivan News that the two attacks reported this month off India’s southern coast raised wider security issues for the Maldives that have previously affected other nearby archipelago nations like the Seychelles.

While the Maldives National Defense Force (MNDF) this week said that the country’s territorial waters had not come under direct attack from piracy originating from Somalia, a spokesman said it shared the UN’s concerns over possible threats in the Indian Ocean.

Tourism angle

Increasing numbers of refugees from Somalia are flooding into northern destinations such as Kenya and Yemen, and with limited opportunities for those remaining, Hart said piracy was at believed to be the country’s second largest source of revenue.

In this lucrative market place for piracy, the UN has expressed concerns that the Indian Ocean is becoming in key battleground in trying to stem maritime attacks as suspects move increasingly further from Somali shores.

Hart said that as cargo fleets moved closer to the Maldives to try and ensure safer shipping routes, pirates were likely to follow in the search of viable targets.

Aside from the potential impact to the country’s own shipping enterprises, the maritime expert added that tourism had also been affected by piracy in other Indian Ocean nations.

“The Maldives is a large group of islands that can make monitoring difficult like in the Seychelles,” he said. “The [Seychelles] back in 2009 had a pirate issue that seriously affected its tourism. This has also been seen around the coast of Kenya in areas like Mombasa, where cruise ships were coming under attack in some cases.”

According to Hart, although cruise ship attacks are relatively isolated occurrences, the UK parliament has recently raised issues over an incident in Kenya that directly targeted tourists on board a vessel – an event that significantly affected cruise interest in the region.

“With the Maldives’ territories made up largely of ocean, (the country is 99 per cent water) the concern is that pirates might become influenced to make similar attacks there,” he added.

Targeting isolated resorts would be outside the traditional modus operandi of Somali pirates, Hart said, explaining that they only attacked targets other than merchant vessels out of opportunity.

“It really depends on how desperate a particular group of pirates becomes, generally larger merchant vessels offer the largest incentives for ransom,” he said. “To set foot onto an island, highjack and kidnap tourists and then try to get back to Somalia using their vessels would be very difficult.”

Despite the challenges posed by such an attack, Hart said that it had not been unheard of for pirates to mount land-based assaults in areas like the Niger Delta.

“Pirates are known to be very adaptive in terms of their methods and targets,” he said. “Wherever someone has tried to prevent them from operating, they have changed their target areas and tactics.”

However, Maldivian tourism officials and insiders have identified piracy as a potential security concern for the resort industry.

Adapting to piracy challenges

Hart claimed that the Maldives could take some lessons from the Seychelles in terms of further tightening maritime security against potential acts of piracy, he added that adopting a fix-all approach to the problem was impractical.

“With regards to piracy, it is difficult to set out a one-stop shop in terms of reducing risks, though I would suggest looking at how the Seychelles has operated in 2009 and 2010. Because of recent monsoon weather [in the Indian Ocean region], defining attack areas and establishing operational islands is very difficult,” he claimed. “However, anything to support additional maritime surveillance to protect islands and [local] waters would be encouraged.”

In terms of a national strategy for piracy prevention, MNDF Major Abdul Raheem said earlier this week that the Maldives is already collaborating with international naval forces – under wider UN military programmes – to patrol and monitor its territorial waters from pirate threats.

Raheem said that despite the serious concerns raised over potential piracy attacks in the Maldives, the MNDF would continue with existing initiatives to try and protect its waters in collaboration with naval forces from other nations like India, Turkey and the US. These nations have taken part in patrols across the country in the last few years.

“Piracy is seen as a major problem in the Maldives and we are very concerned about possible attacks occurring in our waters,” he said at the time. “However, we have not recognised piracy threats flaring up [around the Maldives]. With help from other nations, particularly India, we are continuing patrols.”

Raheem stressed that some Somali vessels had drifted into the country’s waters – often with engine troubles – though it was not clear if they were potential pirate threats or refugees trying to escape the country. Hart claimed that the dilemma over confirming legitimate pirate suspects was a major difficulty in policing international waters against attacks.

“The difference between a pirate and a refugee is often a crew that have thrown their weapons overboard. You have to catch pirates in the act, otherwise it can be impossible to try and stop them.”

From his experiences of studying emerging pirate threats off the Horn of Africa, Hart said it was increasingly common – even in the Indian Ocean – for Somali vessels to wish up on local coasts with no traces of weapons on them, then claiming that they are fishermen lost at sea.

“In certain cases, as opposed to dumping weapons at the threat of being spotted by naval vessels, some pirates will use reconnaissance and GPS systems and have weapons stored securely nearby in order to prepare for possible attacks on vulnerable targets.”

Hart said the situation was further complicated by the tens of thousands of Somalian refugees trying to escape the country that is wrought with political and social instability.

Just this week, the Agence France-Presse (AFP) news agency reported significant increases in the number of refugees from the country, with 20,000 nationals estimated to have attempted the arduous journey to escape to a Kenyan refugee camp in the last fortnight alone.

According to the report, the Dadaab refugee camp built initially for 90,000 people is now home to 360,000 displaced residents. The AFP report suggested that 1.46 million people are thought to have been displaced in Somalia.

Hart said that the domestic difficulties within Somalia, along with its geographic location, had made piracy a lucrative revenue source amidst the country’s many socio-political uncertainties.

“Piracy is a symptom of the problems being seen on the land. A lot of people have been trying to escape the civil war in the country’s south and have been trying to move north to areas like Yemen and Kenya,” he said. “Pirates have also used the very strategic [maritime] location that the Horn of Africa offers and exploited it.”

Amidst the difficulties of trying to find domestic solutions within Somalia as a means of confronting piracy, the UN Security Council has continued to discuss the formation of international courts and prisons to try and bring convicted pirates to justice.

However, Hart said that the effectiveness of these prisons as a potential deterrent to Somali nationals turning to piracy was uncertain.

“At present in Somalia, piracy is the country’s second largest industry. There are already huge risks, but you go out to sea and potentially have huge gains to make,” he claimed. “One possible deterrent would be being arrested and being held in prison. However, even these prisons are likely to be a better environment than life for many in places like Mogadishu – the Somali capital.”

Likes(0)Dislikes(0)