Category: Business & Tourism

Maldives business news

Taxation debate begins in parliament

Parliamentary debate on the government’s economic reform package began today with preliminary debate on legislation to introduce a five percent General Goods and Services Tax (GST).

The International Monetary Fund (IMF)-sanctioned economic reform package also includes bills on business profit tax and income tax as well as amendments to the Tax Administration Act and the Import-Export Act.

Introducing the draft legislation, MP Mohamed Aslam of the ruling Maldivian Democratic Party (MDP) explained that the government’s aim was to replace the current indirect tax in the form of import duties with direct taxes.

“When this bill becomes law and the government stops depending on import duties for income, the main benefit would be that businesses would not have to pay a tax before selling their goods,” he said. “As a result, businesses will expand, there will be increased cash flow for investment and business confidence will be strengthened.”

Once direct taxation was in place, Aslam continued, import duties would be reduced or eliminated on January 1, 2012 concurrently with a hike in the Tourism Goods and Service Tax (TGST) introduced this year from 3.5 per cent to 6 per cent.

Moreover, the government plans to raise the TGST to 10 per cent in 2013 and abolish the current bed tax of US$8 per tourist in the same year.

If the legislation is enacted, said Aslam, tax revenue in 2012 is estimated to be Rf3.2 billion (US$249 million) and Rf4.9 billion (US$381.3 million) in 2013.

The “fundamental purpose” of taxation was equitable distribution of wealth and reducing income disparity, Aslam said: “This is how it’s done in civilised societies. Without taxation, we cannot bring development and prosperity for the people.”

Opposition

“I believe that while taxation is important, the dates for introducing taxes as well as the tax rates should not be determined before properly studying the effects on the whole economy,” said Dr Abdulla Mausoom of the main opposition Dhivehi Rayyithunge Party (DRP).

As a result of inconsistency and “sudden changes to the government’s economic policy,” Mausoom claimed that investors had lost confidence in the Maldivian economy.

While welcoming the elimination of import duties, the DRP MP for Kelaa urged the government to protect the local agriculture industry from foreign competition.

Mausoom also called on the government to revise government working hours to allow civil servants to complement their incomes with part-time jobs, arguing that civil servants deserved a 20 percent pay rise in light of the decision to float the exchange rate within a 20 percent band.

Mausoom further claimed that the main source of “wastage” in the budget was expenditure on political appointees.

“The government should not waste tax revenue needlessly,” he said. “There was a time when the King took taxes from merchants, impoverished the people, and used it for revelry. That time is past.”

“At a time when the gap between rich and poor is widening, I don’t believe at all that this is the best time, the perfect time, the ripe time to take taxes,” said DRP MP Ali Azim, adding that “such an important step must only be taken after proper research and study.”

Azim however conceded that taxation was necessary for the government to provide public goods and services, but repeatedly insisted that the time was not right.

“I am reminded of the Jewish way of doing things,” he said. “That is, further impoverishing those who are already poor. Forcing citizens to beg and telling them, if you sign this [membership] form, you’ll get things done.”

Azim added that citizens should not have to pay taxes even if the bill was passed, claiming that the government continued to disregard laws passed by parliament if it did not suit the current administration.

DRP MP for Vaikaradhoo Ali Arif argued that the public would be adversely affected if a number of different taxes were introduced all at once.

“We are now taking seven per cent from every worker as a contribution to our pensions,” he explained. “We are saying do this gradually. When you take everything at once, the Maldivian citizen is going to fall down.”

Maafanu West MP Abdulla Abdul Raheem, who defected from DRP claiming that “a few tycoons” were opposing taxation, meanwhile underscored the need for sustainable sources of revenue by pointing out that the state was in debt to the tune of Rf18 billion (US$1.4 million) because of deficit financing through loans.

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President claims tax reforms key to addressing national rich-poor divide

President Mohamed Nasheed has claimed tax reforms submitted to parliament last week will let the government bridge the gap between rich and poor in the Maldives, by boosting state income and funding government services.

Speaking yesterday during his weekly radio address, Nasheed referred to a household income and expenditure survey for 2009-2010 he claimed indicated that while 10 percent of the population were spending on average just Rf12 a day, the wealthiest 10 percent had daily outgoings of Rf230.

At present, the president said that four tax bills were awaiting approval in parliament in the form of a Goods and Service Tax Bill, Business Profit Tax Bill, Income Tax Bill and an Amendment Bill to Tax Administration Act that were key parts of trying to provide more equality between the country’s rich and poor.

The government’s proposals to try and boost direct revenue through additional taxation have been met with caution and concern by business groups that fear the president could harm business with economic reforms that needed a gradual introduction. Opposition parliamentarians from parties like the Dhivehi Rayyithunge Party (DRP) and the People’s Alliance (PA) have hit out at the government’s taxation policies claiming they were serving only to stifle development that was needed to boost national income.

According to Nasheed, the proposed legislation relates to replacing current systems of indirect tax such as import duties that affect richer and poorer citizens equally with a system that puts more emphasis on the country’s highest earners.  “[This will change the current] indirect tax on the value of goods to a tax payable by the wealthy, based on the profit of their businesses,” the president stated.

If the government is able to succeed in boosting direct income, measures such as the tax reform would be put into social security and protection measures, the president said.

Nasheed claimed that survey also indicated increased quality of living standards for Maldivians.  The number of people living below the poverty line – defined as earning under Rf23 a day – fell by about 50 percent from figures conducted seven years ago, according to the report.

Despite Nasheed’s optimism, DRP leader Ahmed Thasmeen Ali said last month that the country’s economic reforms – such as plans to devalue the rufiya – would remain a key concern for the DRP during the current parliamentary sitting.

“The government has indicated that it will release proposals to address economic concerns and bring down the dollar rate,” he said. “We do accept the fact that revenue has to be increased, but we would like to see serious attempts to reduce state expenditure and ensure revenue is not being wasted.”

The DRP leader claimed that the party was not specifically calling on the government to slash spending in a single area such as political appointees, but instead asking for a consensus on areas such as in the funding of new offices for local councils formed during local elections held in February.

Similarly, Ahmed Nazim, a PA MP and a member of the Majlis’ Public Finance Committee, said that he believed current government policy was ultimately stifling economic development, with administrative costs within the civil service identified as a notable problem.

“We have small percentage [of funds] to invest in the economy. We cannot move finances to a higher level though as the government doesn’t have the right policies to do this,” he claimed. “For instance, we need to reduce the number of [inhabited] islands by linking them and cutting the overall number of cost centres required for decentralisation.

The comments were made as the IMF claimed that the Maldives economy remained “unsustainable” even after cuts made to the annual 2011 budget, as it concluded its Article IV consultation earlier during the year.

Outside of the Majlis’ floor, business organisations like the Maldives National Chamber of Commerce and Industry (MNCCI) have claimed that further investment was needed to strengthen the business sector before taking on widespread economic and taxation reforms.

MNCCI Treasurer Ahmed Adheeb Abdul Gafoor told Minivan News early last month that he believed that with the planned introduction of the additional GST on general trade and corporate tax, the prospect of policies like a minimum wage would need to be studied in terms of possible impact, particularly in the private sector.

“Introducing these tax reforms and schemes like the minimum wage will be difficult over the next two years. The Maldives is at a disadvantage when it comes to economies of scale as it is,” he said. “What I would like to see is a transitional period rather than introducing these measures straight away.”

Adheeb claimed the government needed more consultation with employers – especially in smaller and medium enterprises – before putting any initiatives like a minimum wage in place, adding that private enterprises had been a key component in the more successful developments of the Maldivian economy.

“We [the private sector] could end up losing some of our competitive edge over other countries. What we need is some breathing space and for these reforms to be bought in gradually,” he said. “We have to build confidence in the economy especially with small and medium businesses. If the minimum wage is going to be introduced it should be set on an economic basis and not for short-term political benefit.”

While sharing the MNCCI’s caution, Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), said this month that he believed that Maldivian businesses should not feel threatened by a shift towards a liberalised economy despite significant changes proposed to tax and regulation.

Janah claimed that government-proposed economic reforms were no different t changes that had already occurred across the western world and parts of South Asia.

Although welcoming market liberalisation in general, the MACI president said he believed that industry would still likely require more time to adapt to the transitions such as a minimum wage and greater taxation on goods and services.

“We are in something of a transition period right now, but what we want businessmen to understand is that they should not feel threatened [by these changes],” he said. “We are being pushed towards a more liberal economic system where we will need more accountability and transparency.”

Janah claimed the proposed changes reflected a potential move away from the style of family-dominated business dealings that he suggested may in some cases be less likely to aim for transparency and detailed accounting.

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Resort giant rejects dismissed local workers’ allegations of foreigner bias

Hospitality giant Conrad Hotels and Resorts has rejected accusations concerning its treatment of a group of Maldivian workers made redundant earlier this month at its Rangali Island Resort, claiming the site adheres to both company and Maldivian labour laws when dealing with staff.

Responding to accusations made by a group of 29 staff that resort management recently decided to make redundant over concerns about profitability during the low season, Conrad claimed all its staff were treated “fairly” regardless of their ethnicity.

The group of staff dismissed this month by the company have alleged that whilst working at the Conrad Rangali Island Resort, they witnessed multiple examples of Maldivian workers being discriminated against in favour of expatriate workers of other nationalities. The group claimed that some staff were additionally made to flout expiry dates and other quality standards by management figures.

Some of the allegations reflect wider concerns about the treatment of Maldivian staff across the country’s resort industry, says the Tourism Employees Association of Maldives (TEAM), which it claims varies significantly in comparison to other countries.  The group claimed that these discrepancies may, in some cases, verge on being “racial abuse”.

Not singling out a particular resort for the practices, TEAM told Minivan News that it believed there were widespread discrepancies in the treatment of Maldivian resort staff in areas such as payment compared to resort workers of other nationalities.

“There are bigger concerns regarding some of these issues – particularly we see there is some salary discrepancy between Maldivian staff and other employees,” claimed TEAM President Ahmed Shihaam. “Right now however, we are focusing on more prominent concerns such as the possible introduction of a national minimum wage.”

The group of workers dismissed from Conrad this month claimed that they believed they had been removed from their positions for demanding action on issues involving site management and staff.  The workers were dismissed with redundancy packages, according to Conrad.

According to the group, management figures had threatened to fire members of staff for their role in trying to raise the issues, which they claimed were linked to strikes taking place at the resort over several days in March of this year.

“There is a lot of discrimination going on in the island, foreigners are more favoured than Maldivians, they earn more, have luxurious rooms to sleep and everything is so perfect for them. We sleep 10-15 men in a room, while foreigners sleep maximum three in a room,” a dismissed former worker at the Conrad resort told Minivan News. ‘’It is very regrettable that we are being mistreated and enslaved in our own country.”

The spokesperson for the group claimed that none of the staff who were given redundancy by the company had deserved to be removed from their posts; having tried to ensure that the “high standards” expected of the resort were being met.

One member of the dismissed group who worked in the resort’s house keeping department alleged that human resources officials at the site turned a blind eye when some staff failed to properly wash towels beyond soaking them in water, drying them off and throwing them onto an office floor.

‘’One day when I was at the house keeping office I was told to wipe out the expiry date of all the mouth wash bottles that has expired,’’ the person claimed. ‘’I told the house keeper that he can’t do that, but I was forced to do it if I wanted to work there.’’

Amongst a list of accusations, the dismissed staff claimed that some senior management figures had  abused their roles by arranging to have the resort’s high-profile underwater restaurant dismiss confirmed bookings so as to accommodate a private dinner for a senior resort employee.

The spokesperson for the group claimed that the company was aware of the restaurant closure, as well as a number of policies it claimed breached rules on safety and employment regulation.

‘’[Local staff] have to test wine, which it violates the Tourism Act. It is also not allowed to have a Maldivian as a barmen, but currently there is a Maldivian barmen at the island,’’ he alleged.

The group’s spokesperson alleged that he and his colleagues had also been asked to open a number of expired yoghurt containers in the main restaurant’s kitchen and to pour them all in to a big bowel to serve for breakfast that morning.

‘’We did it, it was not something related to us or something that would harm us, but we complained to  the management and there was no action taken against it,’’ he said.

Resort response

Addressing the accusations made by its former staff, Conrad Hotels said it preferred not to enter into a “public discussion” concerning the claims. Conrad said it offered several official channels within its organisation that allowed staff to address particular concerns over adherence to company rules and policy during their employment.

The company added that as an international hotel chain, it worked to ensure its employment policies were in line both with Maldivian labour laws and global company standards in order to protect staff at Rangali Island. The resort employed almost three Maldivian workers to each expatriate member of staff, the resort noted.

“The hotel follows employment policies that are consistent with the country’s labour laws and the company’s own standard practices. This includes, but is not limited to fair remuneration, respectful treatment of our team members, training and development opportunities, diversity recognition and fair treatment for all,” stated the company. “It is important to note that as of June 2011, 74 percent of the resort’s team members are Maldivian.”

Conrad also reiterated its claim that the decision to release 29 staff was made based for business reasons – with all members receiving redundancy packages to “help them through the transition.”

Without commenting specifically on the policy of an individual resort, ‘Sim’ Mohamed Ibrahim, the Secretary General of the Maldives Association of Tourism Industry (MATI) said the group had not been made aware or been involved in dealing with concerns about discrepancies in the conditions of Maldivian resort workers, as compared to other nationalities.

However, Sim said he believed that the government would not allow Maldivian staff to be treated unfairly and in a disproportionate manner to other nationalities of workers under the conditions of its Employment Act.

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Rise in blackmarket exchange rate no setback for currency stability aims, claims Economic Development Minister

Two months after the government announced plans for greater economic stability by devaluing its currency against the US dollar, the Maldives’ Economic Development Minister has said increases in black market exchange rates are no setback to the country’s long-term financial aims.

Amidst local media reports that the value of the Maldivian rufiyaa – capped until April this year at Rf12.85 against the US dollar – was trading at Rf16.5 on the black market, Minister Mahmood Razee said that authorities would likely wait for an allotted three month-period to pass before considering any additional financial support measures.

Despite this approach, the Maldives National Chamber of Commerce and Industry (MNCCI) has claimed that local enterprise is not being supported by financial institutions like banks in terms its needs – particularly for importers reliant on foreign currency to bring in goods to the market.

However, sticking to earlier estimates that the managed float of the rufiyaa within 20 percent of the 12.85 exchange would require about three months to begin to bring stability, Razee claimed that it remained too early to say if additional support measures were needed from the government to bridge the dollar supply.

“I don’t see the black-market exchange rate as a setback as it is low [tourism] season right now, meaning we are earning fewer dollars,” he said. “Now it has been a couple of months since we changed the dollar rate. When [the currency float] was announced in April we said it will take around three months to see if the rate will stabilize. We do not know yet whether there is just a dip in [dollar] supply or something else.”

When addressing potential changes already bought about to the exchange rate since the dollar float was introduced, Razee said he believed it remained too early to speculate on what longer term impacts had taken place in regards to the availability of dollars.

The Economic Development Minister added that if there were no signs of stabilisation by next month, then he expected the Ministry of Finance to begin looking at additional measures to try and bring some market stability to the economy.

“I’m not privy to the exact information on what these measures could be right now,” he said. “What we have been doing is working with national authorities in markets like India to see what means of assistance there might be.”

The rufiyaa has sat at the maximum limit of Rf15.42 following the government’s managed float of the rufiyaa within a 20 percent band.

Treasurer of the Maldives National Chamber of Commerce and Industry (MNCCI), Ahmed Adheeb Abdul Gafoor, told Minivan News that he believed that the managed currency float had served only to exacerbate the difficulties facing local businesses that were being given little choice other than to rely on black market exchange rates.

“The banks are not providing dollars to businesses, especially for importer and traders who are the backbone of the economy and vital to distributing goods,” he claimed. “With Ramazan ahead, we have been told that the State Trading Organisation (STO) will be providing 27 goods and commodities at stable prices, but we will have to see if this is possible.”

Adheeb claimed that in the immediate term, banks had simply not been providing additional credit lines for businesses requiring foreign currency exchanges, a demand he said that was having to be satisfied through additional financial channels.

“The solution I believe is that banks will have to provide,” he said. “Credit card payments are being settled in rifuyaa, yet many importers are not being satisfied when it comes to their own needs.”

Speaking as a private citizen Adheeb said that more changes were needed in how banks dealt with business as well as how government were looking to encourage sustainable foreign finance.

“We have seen no encouraging signs [from the float] and I don’t think this is a good policy at this time,” he said.

The MNCCI treasurer said that he believed that alongside government talk of minimum wages, it would be wise to discuss maximum wages in certain cases to try and balance national; budget more effectively.

“I don’t understand why this is a policy not being discussed,” he added.

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India to grant essential commodities to the Maldives

The Indian government yesterday approved the supply of a list of essential commodities requested by the Maldives government for the remainder of 2011, the Foreign Ministry has said.

According to the ministry, the government of India has approved exports of essential food commodities such as sugar, eggs, potatoes, onions, dhal, and wheat flour.

‘’While these commodities have been approved for a period of three years, construction materials such as stone aggregate and river sand have been approved for a year,” stated the ministry.

“The Ministry of Foreign Affairs is still waiting for the authorisation of rice from the Government of India.’’

Alongside India, the Foreign Ministry said that the government of Bangladesh had also authorised the export of stone aggregate to the Maldives resulting from negotiations held last year.

‘’During the recent visit by Foreign Minister Ahmed Naseem, the matter was expedited by Bangladeshi authorities,’’ the foreign ministry said. ‘’The Bangladeshi Government had requested the State Trading Organisation (STO) to conduct a feasibility assessment to work out the details between the two governments.’’

In his recent visit to Bangladesh, Naseem signed a memorandum of understanding “Concerning Placement of Manpower” with Bangladeshi government.

Officials at the Foreign Ministry claimed at the time that the MOU will help preserve the rights of the Bangladeshi labourers in the Maldives.

Amidst pledges of increased commodity supplies, The King Saud University in Riyadh, Saudi Arabia, has granted 5 scholarship opportunities to the Maldives.

The Rector of the University, Dr Abdulla Al Usman noted that the scholarships will be available for the upcoming academic year during a meeting with Adam Hassan, the Maldivian Ambassador to Saudi Arabia.

”The scholarships granted by King Saud University are for postgraduate studies, and according to Dr Al Usman there were no specific allocations for either Masters or PhD,” the foreign ministry said.

The ministry also said that King Saud University is one of the oldest Universities in Saudi Arabia, with courses are available in the fields of engineering, sciences, food and agriculture, pharmaceuticals, Applied Medical Science and Nursing amongst others.

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MATI not taking sides on proposed resort lease amendments

Proposed amendments to the Tourism Act relating to lease extensions for Maldivian resorts are said to have divided opinion among industry insiders, according to the Maldives Association of Tourism Industry (MATI).

MATI Secretary General ‘Sim’ Mohamed Ibrahim told Minivan News that proposals presented to the Majlis yesterday by MP Abdu Raheem Abdulla, if passed, would allow 50 year lease extension payments to be made gradually on an annual basis.  Sim claimed that the decision to support or oppose the amendment had proven difficult for the association, with different resort owners welcoming and opposing the bill.

“MATI cannot take sides on this issue. While we have some people who can pay the money straight away, we know of others [resort owners], who would prefer the amendments,” he said.

According to newspaper Haveeru, Abdulla’s proposed amendment would allow contractors requesting an extension of their existing lease to pay a US$100,000 fee to pay instalments every year over the life of the contract.

Abdulla was reported to have forwarded the amendment over fears that news jobs would not be created in the country if the government received upfront payments from extension agreements.

Sim said that he believed that at present, the government preferred the system currently in use where lease extensions were paid within an 18-month period of a contract being signed by a resort.

A Tourism Ministry spokesperson confirmed that the Government’s official view was that it supported existing tourism laws that supported an upfront fee payment made over a shorter time-frame.

The spokesperson conceded that he had not fully read the proposals forwarded by Abdulla at present and was unable to elaborate on further on the exact changes they may entail for the industry.

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Tea shop closed by MFDA after live goat found in toilet

The Maldives Food and Drug Authority (MFDA) has shut down a number of well-known Male’ restaurants and tea shops for hygiene breaches.

One famous tea shop on Majeedhee Magu, ‘Faseyha Point’, was closed after inspectors found a live goat tied up inside the teashop’s toilet.

MFDA said the tea shop’s hygiene condition was very poor.

Well known restaurants West Park and Raaveriya in Maafannu have also been closed in the MFDA’s hygiene crackdown, after both failed to meet the authority’s standards.

Media Coordinator of MFDA Jameela Mohamed told Minivan News that the authority shut down West Park because cats were roaming around in the service area.

‘’The restaurant’s kitchen door is always open and cats will enter the kitchen,’’ she said.

Jameela said the Raaveriya restaurant had house flies in the kitchen and lizards in their storeroom.

‘’So far we have checked 82 places and eight have been shutdown,’’ Jameela said.

Both Raaveriya Restaurant and West Park are often used as caters for celebrating wedding parties, birthdays and other such events.

Manager of West Park, Abdulla Gadhir, told newspaper Haveeru that cats do not enter the kitchen area of the restaurant.

He told the paper that there were two cats that lived in the fishing area right next to the restaurant.

Manager of Raaveriya, Ahmed Shareef told the paper that the restaurant sprayed insecticide weekly to terminate houseflies and other insects.

Director General of MFDA Shareefa Adam recently told Minivan News that any premises that were shut down could reapply to open again once they had corrected issues raised with their business.

Shareefa said the MFDA were using “basic” minimum hygiene standards such as cleanliness and preventing foreign materials from getting into food when inspecting the food outlets.

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France helping Maldives realise development and multicultural ambitions: President

President Mohamed Nasheed has welcomed a series of events in the Maldives designed to try and forge closer cultural and development partnerships with France, claiming they are indicative of a country that is looking to become “more democratic, more liberal” and ultimately, freer.

Speaking last night during a reception at the National Art Gallery in Male’, Nasheed joined Christine Robichon, French ambassador to the Maldives, in playing up the latest developments in what he claimed was a long relationship that dated back to the 1700’s and was continuing to benefit the nation in a variety of different ways.

This week in particular has seen a number of developments relating to French culture and expertise in the Maldives, including the naval ship FS Mistral docked in the country’s waters as part of a long-term training deployment and the more scaled back establishment of the Alliance Francaise in the recently opened National Library in Male’.

The Alliance Francaise is an organisation that works to promote French cultural language programmes across the world, and is running a Film Festival of productions from French speaking nations. The group was first officially recognised in the Maldives in 2009 and estimates that the number of students now learning French at public schools has increased to 400 people from just four during the last two years.

Historically the Maldives has seen significant interest from French tourists in visiting its waters and resorts. While conceding that the strength of this interest had fallen behind other markets like China, Ambassador Robichon told guests at the gallery that the option for a growing number of students in the country to learn French may not make as much business sense locally, but still offered the “variety” of speaking a major international language for Maldivian students.

President Nasheed said that he hoped a growing number of Maldivian children and the wider population were looking to embrace different history, culture and languages through education.

“We want to welcome everyone to the country, we want to become multicultural and we are moving along these lines and with our new found friendship I am sure we will be able to achieve that,” he said.

Along with the potential cultural pursuits being offered to Maldivians, President Nasheed also announced that work was beginning on French-sponsored development assistance projects to provide sewerage and water systems to islands in the country.

Whilst thanking the French ambassador for her country’s assistance with these developments, Nasheed claimed that with its recent ascension from being designated as a UN ‘least developed country’ (LDC) to a middle income nation, the Maldives was having to learn to try and stand on its own two feet.

“Recently we have been promoted from a least developed country and we want to stand up to that. We want to be able to fend for ourselves and live within our means,” he said. “We do not want aid, we want understanding and friendship and I am sure we will find that in France.”

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Business should not feel threatened by economic liberalisation: MACI President

Maldivian businesses should not feel threatened by a shift towards a liberalised economy despite the significant changes to tax and regulation, the chair of an economic forum between industry and cabinet heads held this week in Male’ has said.

Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI) and a business owner himself, claimed that government-proposed economic reforms were no different changes that had already occurred across the western world and parts of South Asia.

While welcoming liberalisation in general, the MACI president said he believed that industry would still likely require more time to adapt to the transitions such as a minimum wage and greater taxation on goods and services.

“We are in something of a transition period right now, but what we want businessmen to understand is that they should not feel threatened [by these changes],” he said. “We are being pushed towards a more liberal economic system where we will need more accountability and transparency.”

Janah claimed the proposed changes reflected a potential move away from the style of family-dominated business dealings that he suggested may in some cases have been less likely to aim for transparency and detailed accounting.

“These things will be exposed, so there may be some reluctance,” he said.

Janah’s comments were made following the second in an ongoing series of meetings held between various local associations like the Maldives Association of Tourism Industries (MATI), the Maldives Association of Travel Agents and Tour Operators (MATATO) and the Liveaboard Association of Maldives (LAM) and various cabinet ministers.

This week’s forum, which was chaired by the MACI president, was the second of its kind to be held between business and cabinet members this year over government economic reform strategies. Finance Minister Ahmed Inaz, Tourism Minister Dr Mariyam Zulfa and the Governor of the Maldives Monetary Authority (MMA) Fazeel Najeeb were all in attendance, with organisers claiming that workers’ associations and media representatives were also invited.

Business roundtable

While the initial meeting was focused prominently on issues like government aims to introduce a minimum wage, Janah said that in chairing this week’s meeting, he had called for the formation of a business roundtable that would represent industry and commerce across the country in directly lobbying the government over potential concerns.

The MACI president said that while this week’s business meetings still had political components during their discussions, he hoped  to give attendees a forum to discuss various industry issues more directly, beyond the partisan thinking often linked to decision making in the country.

“We have more than enough political forums, but not enough is being done to allow businesses to talk on a purely technical level,” he said. “I propose that we start a business roundtable. Let’s get all the industries on board and look at various issues including climate change.”

With so many changes expected to be made to business practice in the Maldives, Janah said that he hoped a round-table would be better able to lobby for “sustainable” implementation of reforms in areas such as pay and taxes.

In the context of the government’s reform agenda, other association heads present at the forum suggested that a gradual implementation of a general Goods and Services Tax (GST) and a minimum wage over a number of years were needed by the industry as an example of “sustainable developments”, particularly for small and medium industries.

The collaborations between government and industry targeted through the forums were welcomed by State Minister of Finance Ahmed Assad, who told Minivan News that the meetings were focused on trying to outline a development path for business to the benefit of the entire country as well as the economy.

“As the economy grows, so also should government finances so that the state can meet the demands of the public. Our main aim is for business to thrive to support government finance at sustainable levels,” he said.

Assad claimed that at present, the government’s sole revenue stream from business outside of the country’s tourist industry – recently estimated to amount potentially to around US$3 billion – was in the form of customs duty.

However, with the proposed introduction of additional taxes like GST on local businesses, the state finance minister added that this would create growing interest in the conduct of how government was spending income.

“Once we have a state run on contributions from business, I am sure there will be a lot more interest where this funding goes,” he said.

Robin Hoods and Bolsheviks

Addressing the notion of the term “sustainable” in regards to industry developments, Assad rejected accusations that a combined lobbying group would grant further power to business heads at the expense of individual workers and their rights.

From his own perspective, the state minister said he believed local businesses were generally wary of creating “Robin Hoods and Bolsheviks” by discriminating and alienating their work forces and appreciated that negative worker relations were not in their interest.

“Smart people will always take care of their own workers,” he said. “Maldivian business people are intelligent and wish to keep a good balance in the workplace.”

A stable and confident workforce was also highlighted by Assad as being hugely important in attracting interest from foreign investment to the Maldives.

The tourism side

Among industry groups present at this week’s economic minister was the Maldives Association of Travel Agents and Tour Operators (MATATO), which raised concerns in particular over government commitments to the South Asian Association for Regional Cooperation (SAARC) potentially removing restrictions on foreign businesses.

Mohamed Maleeh Jamal, Secretary General for MATATO, said the group held some concerns about SAARC initiatives to open up the Maldives tourism markets and allowing foreign travel agents to operate in the country.

While claiming to not be against market liberalisation, Maleeh said that local travel agents were facing increased competition from booking engines and unregistered travel agencies operating illegally in the country.

Amidst growing competitiveness, the MATATO secretary general said that other member nations like Sri Lanka had recently dropped providing free visas on arrival to the country for any nation other than Singapore or the Maldives that was claimed to contravene SAARC rulings on freedom of movement.

In addressing matters specific to the Maldives, Maleeh claimed that MATATO had agreed during the previous forum held two weeks ago that it would support the introduction of the minimum wage, although the group said it had required government action on reducing illegal labour in the country.

“We need more research on the impacts of this and why local people are not seeking out available work,” he said.

Maleeh claimed that even without the possible formation of a formal business round-table to debate industry-wide policy, the association welcomed continued collaboration between various business heads and government.

However, one workers group in the country linked to tourism has pressed the government on implementing more immediate policy changes in relation to employment regulation.

Just last month, the Tourism Employees Association of the Maldives (TEAM) actively urged the government to implement a minimum wage needed to address what it sees as a growing gap between the rich and poor.

“TEAM believes that the most important thing to do in order to change the current situation of all persons working in the tourism industry is to implement a minimum wage,’’ said the organisation at the time.

“A minimum wage is also important to avoid the potential bankruptcy of small and medium businesses and to eliminate the differentiation between the rich and poor.’’

TEAM urged the government to conduct a fair survey and to determine an adequate minimum wages, “instead of only listening to few influential big businessmen.’’

The association claimed the minimum wage for those working in the tourism sector should be at least Rf 5000 (US$325) per month.

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