With voting to finalise the 2011 state budget expected to take place later today, acting Finance Minister Mahmood Razee said he remains confident that the government remains on target to meet its financial objectives, though stressed it was too early to say without “seeing amendments” suggested by parliament.
Despite criticisms by some opposition MPs regarding what they see as a lack of detail in the budget over the exact nature of government spending – particularly in areas of decentralisation and broadcaster funding – Razee said this morning that he believed any potential member-submitted amendments would not set back proposed aims of trying to reduce spending.
“We would only be concerned [by the amendments] if the total budget goes over the 12.37bn (US$962.6 million) originally set,” he said.
Razee added that it would also be vital to try and ensure the predicted 2011 budget deficit remained at about 16 per cent, after coming under pressure from financial institutions like the International Monetary Fund (IMF) to cut the current figure of around 26.5 per cent.
“We would need to maintain the deficit at that level [16 per cent]. Most of the discussions we have had about the deficit have been in line with this,” he said. “However, I don’t know what will happen until voting.”
The passing of the annual budget is constitutionally required to be completed before the end of the previous calendar year, with the government having claimed to be focused on spending cuts as part of plans to try and reduce the country’s budget deficit.
There has been concern over whether the budget will be passed on time, with debate taking place within parliament over the last few days as members have attempted to add amendments to the annual expenditure before passing it through the Majlis.
Budget criticism has come from both opposition MPs like Ahmed Nazim and independent members like Mohamed ‘Kutti’ Nasheed over claims that there is insufficient detail about the exact nature of certain government spending projects.
Nazim has claimed that although opposition members were just as committed to ensuring the country’s budget was completed within the deadline, there remained concerns over issues such as the government supplying about Rf54 million to the Maldives National Broadcasting Corperation (MNBC) without seemingly including it in the budget.
“There are so many problems with the budget, which is lacking details regarding a number of projects and figures,” he said.
Nasheed, an independent MP, also said last week that he had identified some preliminary concerns over spending allocation in the budget, particularly in areas such as decentralisation, despite claiming he was optimistic that the finance document would be passed before the New Year deadline.
The arrival of a new year is also expected to see a new local airline called Mega Maldives take to the country’s skies in what it has said is an attempt to bring a greater share of the lucrative tourist transportation market into local hands, at least should everything go to plan during its launch.
After today obtaining an Airline Operating Certificate (AOC) from the government that will allow it to operate flights both inside and out of the country, the new company has claimed that it hopes to launch the first of a number of scheduled services between the destinations of Hong Kong, Male’ International Airport and Gan Airport from New Year’s Eve.
The new airline said that although most of the paper work required to begin flight operations alongside the AOC has been completed, it expected to receive confirmation that it can commence flights between the Maldives and Hong Kong during the next 10 days or so.
Having obtained permission to fly, Mega Maldives has become the latest in a growing number of flight operators announcing services to try and tap interest in travelling to the Maldives from destinations across Asia to airports both in Male’ and Gan during the last 12 months.
Package companies such as India-based MakeMyTrip said they have been operating scheduled flights to Gan since early October, while budget airlines such as AirAsia and SpiceJet have also announced plans to begin flying to the Maldives by the first quarter of 2011.
Tourism officials in the country have claimed that tourist interest within the Maldives has begun to strengthen again in 2010 after a difficult 12 months in 2009, with official figures showing a 21.8 per cent rise in visitor numbers up to October.
Mifzal Ahmed, a board director for the 55 per cent Maldivian-owned Mega Maldives joint venture, told Minivan News that the company aimed to follow in the footsteps of operators such as Hawaiian Airlines by attempting to tap into interest for authentic local experiences and services – even from within an aeroplane.
The Maldives already has a national airliner under the Maldivian brand, which is operated by Island Aviation Services and currently operates services to Trivandrum, India, alongside its domestic services.
Maldivian has itself expressed interest in possible plans to expand to more international destinations upon an Initial Public Offering (IPO) of its stock, expected around halfway through the next decade.
However, Ahmed claimed that Mega Maldives has been created in an attempt to offer international passengers from across Asia “something different” in terms of travelling to the Maldives, aside from being one of a few international airlines currently flying to Gan.
“First of all we have a crew that is more than 50 per cent Maldivian, which reflects our aim to try and bring a Maldives feel to our services,” he said.
Alongside having a cabin crew that the airline said would be dressed in uniform that reflects traditional Maldives’ style, the company is also considering looking at incorporating elements such as local music, crafts and even possibly food dishes into its services, according to Ahmed, a Maldivian himself.
“We will try this, it will depend on in-flight catering, but to us this will feel like a Maldivian service.”
Mega Maldives is a joint venture company with 55 per cent of its operations owned by Maldives-based ZM Holdings and the other 45 per cent belonging to US-based group, W-Cap.
It is this Maldivian element within the business that Ahmed said had helped encourage the group to begin flying to Gan, where he claimed foreign rivals may, by contrast, have worried about the possible financial “danger” in travelling to a destination that is not as well supported by international flight services.
“On one side there is a cost aspect in flying to Gan,” he said. “On the other hand, there is strong interest in creating more services to the destination, the government and airport are very keen to have us flying there.”
Ultimately, Ahmed said that the service would not been bound solely to Gan Airport and would initially aim to fly between the southerly Maldives’ island, Male’ and Hong Kong as part of a multi-destination flight service.
As an entirely new flight provider, Ahmed claimed Mega Maldives was not too concerned about potentially going up against established flight groups already flying to the Maldives, such as Emirates, Qatar and Singapore Airlines, as they were looking to operate a different kind of service. “We operate on a scheduled charter model by working with travel agents, which will allow us to provide more reasonable fares,” he said. “Much like all flight operators in the Maldives, most of our traffic will be through tourism, though we can develop special partnerships with travel agents to offer special and one- off routes to destinations like India.”
Ahmed claimed that this strategy could also allow Mega Maldives to put on occasional “one-off” services to allow Maldivians to travel to special sporting or religious events abroad in the future.
In the long-term though, Ahmed claimed that Mega Maldives does also have aspirations for regional expansion of its services.
“We have interest in other markets in Asia, though we know we have competition, so we are keeping our cards close to our chest at the moment,” he said.
Indian infrastructure giant GMR and Malaysia Airports Holdings Berhad (MAHB) have formally taken over the reins of Male’ International Airport, the beginning of an expansion project that includes the construction of a new airport terminal by 2014 and the refurbishment of the existing terminal in just 180 days.
Minivan News speaks to the CEO of GMR Male’ International Airport, Andrew Harrison, the man now in charge of making it happen.
JJ Robinson: What stage does the airport currently stand at following the official handover on November 25?
Andrew Harrison: The focus so far has been on engagement with employees, and bringing together various stakeholders. An airport is like a community, with customs, immigration, Maldives National Defence Force (MNDF), ground handling and all the other services involved. We want to ensure people work together as a community and recognise that each depends on the other to make sure the experience for the passenger best it can be.
The development aspect involves hard construction, but it is very important to look at development of the people – the greatest asset we have. If we develop our people they will look after our business.
JJ: How is the situation different now compared with when GMR first arrived?
AH: An initial challenge was that we had a ground handling company, MACL, and another company that did cleaning and inflight catering. We were not taking the catering but we were taking the cleaning. So you have three different companies with three different organisational cultures that now need to merge into one, and add the culture of GMR Airports.
People ask what apprehensions I had – I wondered how we were going to merge these organisational cultures together. That was the real challenge. Having said that, people responded very well. There were lots of issues where there were differences between those companies, so we had to work to iron out those differences,
JJ: What were an example of some of those differences?
AH: The amount of leave people received in the three companies was different, so we standardise that so one isn’t perceived as having more than another. There are obviously differences in pay scales as well, but that has to be addressed over a longer period of time.employees. to integrate and look at aspects skills, performance and reviews of 1513 employees takes a period of time.
JJ: You had a high success rate retaining employees to the new airport company?
Airport CEO Andrew Harrison at the handover ceremony (left)
AH: It was 100 percent. [Initially] we had a few people overseas on training and it took a bit longer to get the documentation to them. We had a process with the government of the Maldives and MACL. In the conditions for handover we had to demonstrate the implementation and success of the plan, and we had a daily report on how many people on the list passed to us accepted our offer and conditions. I’m pleased to say it was 100 percent.
In terms of people development we are now looking at training programmes. We are just about to send 25 fire and rescue staff to Malaysia for three and a half months of training.
I was interested in that training being not just an assignment, but something people will value and recognise and help to advance themselves. So I said we will invite the parents by surprise to go to the passing out parade of the two best students – best improvement and best overall student – so they can watch their sons be recognised for the distinction they have demonstrated in their learning. I think that is a way we are showing that we are going the extra mile.
In terms of development, the new terminal will be completed in late summer of 2014, and will be really designed to reflect the beauty of Maldives. The terminal will have large glass facades, and natural materials people are used to seeing in resorts, skylights to allow natural light in, and natural water bodies and water features surrounding terminal so you always have that feeling of being close to water. That’s one of the reasons people come to the Maldives.
As for the refurbishment of the existing terminal, we [have launched] a 180 day terminal improvement programme. In the concession agreement we are given one year to complete it, but we have decided to do it in six months.
In those six months we will look at improvements in processing capacity, such as baggage reclaim, capacity of the check-in counters, and centralised security screening – there are two at the moment. This will give passengers greater time in retail area and reduce queuing.
JJ: The GMR bid was particularly generous on the fuel revenue sharing with the government (27 percent from 2015), and less so with the sharing of airport revenue (10 percent from 2015). How will GMR justify such a low margin on fuel?
AH: Today in global airport development there is a balance between aeronautical revenue and non-aeronautical revenue. Aeronautical revenue includes typical revenue from aircraft landing and parking, direct charges to airlines and passenger fees.
But in these challenging times there is continuing pressure to reduce the burden of aeronautical charges. The development of the last few years has been an emphasis on non-aeronautical revenue, as the burden of fuel costs, and engineering costs has increased significantly.
We look at the non-aeronautical development as being part of the commercial arrangement, including the the utilisation adjacent land, conference facilities, hotels, things that actually compliment our services. Our strategy in the long term is a greater focus on these.
At same time, we will focus on the development of the economy as a whole. Because the airport is literally a gateway, an economic engine. It facilitates trade, travel and employment. Generations of Maldivians have worked at this airport and we see this as continuing.
We see ourselves as having a much wider remit – for example, today there is the resurgence of Sri Lanka. 10-12 years ago people booked a 14-day holiday, with 10 days in Sri Lanka, four days in Maldives. They would spend five days in Sri Lanka, come over to the Maldives for four days and go back for five.
When the Liberation Tigers of Tamil Eelam (LTTE) problems arose in Sri Lanka, people came to the Maldives because of the perception of increased security and reduced risk.
Now Sri Lanka has put the LTTE difficulties behind them, we now have the difficulty of the resurgence of Sri Lanka. Now we run the risk people going back to Sri Lanka because it cheaper – and you can do many things there that you can do in the Maldives. In my opinion it’s not as beautiful, and it’s not as exclusive, but not everyone wants to pay that [higher] price in the Maldives.
We are also looking at developing much better traffic between the Maldives and the United States. Today it is the most under-represented nationality in terms of visitors to the Maldives. We have airlines like Qatar Airways and Emirates so we know we have flight connectivity which will allow seamless transfer.
JJ: How do you convince a country like the US to fly to the Maldives instead of closer and more developed destinations such as the Caribbean and Bahamas?
AH: They will be other destinations the Maldives competes with – Hawaii for the US and the Canary Islands for the UK. Fiji to a much lesser extent, which serves Australia and New Zealand.
There is competition with Mauritius to far lower extent, because even though it is a far bigger island it doesn’t attract the number of visitors that the Maldives does.
Curiously, one of the reasons I discovered for this is because the temperature of the water is cooler so divers have to spend less time diving compared to here where our average water temperature is 26 degrees.
JJ: The fuel trade has historically been a key component of the airport’s income, will that continue?
AH: With the fuel trade today we have means of procuring and supplying fuel to the airlines. The airlines also have some of their own arrangements, because they take advantage of global purchasing deals, and companies that supply them in other countries also supply them here.
What we are doing is looking at the existing contracts, and simply reviewing how we can enhance consumer gets. Some airlines like greater term of credit, other airlines a term of time – we have to match various needs and at the same time remain a competitor in the region.
JJ: There have been concerns that such a high fuel share with will compress your own fuel revenue, which could involve passing on the cost and potentially make it more expensive for the airline.
AH: No, I think the strategy we recognise is that we have experience introducing efficiencies. MAHB has 39 airports, GMR has three airports. Between two of us we can leverage what we know and bring that advantage here, and that will make us more efficient.
Because what drives the price of fuel is the cost. If we become more efficient providing fuel we can manage the implications going forward. We have studied that very carefully so that it represents a very good deal for the people of the Maldives and us as business, and also the consumer, be they a passenger or airline.
JJ: How big a part of the airport’s revenue do you expect the fuel trade to be?
AH: It’s not an issue for us, to be honest. We have so many advantages through being able to help the government to influence amount traffic coming in, and in the airport. That doesn’t just mean duty free but food and beverage, transfer services – there are so many needs passengers have here because of the uniqueness of the way people arrive and depart from the Maldives.
The seaplane operation, for example, is an example of how we collaborate. In our original design for the terminal the arrivals section sat on top of the seaplane operation. We are now adjusting that because we recognise how important the seaplane operation is to the Maldives – 60 percent of arrivals are transferring to seaplanes.
What I’d like is that once you come out of arrivals after clearing customs, you have three choices: seaplane transfer, boat transfers to resorts, and passenger transfer to Male’. It is very straightforward and more importantly it is very efficient.
We see many opportunities with the non-aeronautical developments once we complete the terminal development. We have proposals in terms of developing the land area [around the airport],and that is where we see the opportunities.
The concourse of the new terminal
JJ: What is your own background, and what do you bring to the operation?
AH: I have worked for GMR for five years and before that the TBI group in the UK, which ran 26 airports.I have worked 13 airports around the world.
I guess what I bring is an understanding of how an airport can be developed efficiently within a stakeholder environment, looking at needs of a country as a whole, where we are a facilitator of the economy while ensuring the development of leadership qualities in people so they can take over managing the airport.
In a period of five years, we would like this airport to be managed entirely by Maldivians. And some of those Maldivians will move onto our other projects. My real role is to mentor and lead our team here and develop them to go onto bigger and better things.
JJ: An airport is a complex operation – has it been hard to find skills such as qualified engineers?
AH: It has not been a challenge because Maldivians are very talent and very dynamic. They are very self-sufficient. I have guys here in engineering who are able to do virtually anything. It’s amazing, it’s a new skill, and I think to myself, ‘Wow, if we’d had people like this working in India those projects could have been done in half the time.’
We have a lot to learn from Maldivians here, but at the same time we have a lot to share with them.
We recognise that a lot of people have gained their skills through time spent in that department – that doesn’t mean they are in touch with current trends, products and processes that have changed over time to make things more efficient. We are also going to send people to other airports in our group, to give them exposure.
It’s not a matter of finding technological capacity – what we recognise is that we can enhance skills greatly with training and exposure to other airports.
JJ: What have been some of the key challenges here?
AH: There have been a few. I think one of the challenges has been perhaps the misunderstanding people have had – and that’s really changed – about what we are here to do.
There was an earlier misconception that we were going to put a thousand Indians on a boat and set sail for the Maldives and replace everybody here with Indians because it was cheaper labour and would be our preference. But clearly it is not. We are not doing that. Our manage structure at the leadership level is a combination of Maldivians and non-Maldivians. We will learn from them, and share what we have learned. Our challenge is to transfer knowledge to them and harness what they have learned so we can use them in our other airports.
Then the next time we bid for an island airport I’ll know exactly who to call on to take leadership roles in that airport, because I know guys who run a great island airport here.
The second misconception has been that we have come in here to increase all the rates.
JJ: Former Deputy Leader of the opposition Umar Naseer famously stated that the airport deal “will allow Israeli flights to stop over after bombing Arab countries.” How do you respond to such rhetoric?
AH: We look at it, and the information in the media at moment. I find here that people are intelligent and forward thinking, and they able to determine what is fact and fiction. We have full confidence in general public’s ability to discern that.
I think a challenge we faced was the notion that we were coming in and increasing charges. The CEO of the International Air Transport Association (IATA) has said their members prepared to pay increased charges, provided they see improvement in the airport in terms level or service and the development of airport. Clearly they will see that [in the Maldives].
Our mandate is to review the cost of providing services, determine what every stakeholder wants, and determine at what cost we can provide that.
We have airlines who have come to us and told us that the lounge is not what they expect, and that they would like to build their own lounge – three airlines have come forward to build their own lounge – but cant have everyone building their own lounge because we don’t have enough space for that. But what we can say is, ‘What do you require?’
For instance, only one airline currently has a first class service into Male’. All the rest have a business class and economy service, and sometimes premium economy. But the airlines are telling us that some of the passengers arriving on business class are in fact first class passengers, who have flown from London to their hub in first class, but then in business as a downgrade. To all intents they are a first class passenger with first class expectations, and as a result of that the kind of lounge the expect is not the kind they get.
We are working to determine that. But the person on the street may decide ‘You’ve come in here and built a new lounge and now you’re charging more money for it.’ But what they don’t see is the airlines requirement to actually have that facility, because the facility that is there does not meet the standards they expect it to.
These are some of the areas there are misconceptions that are not clear to the public and may be misconstrued.
Exterior of the new terminal, at night
JJ: On the subject of fact and fiction, I’m sure you’re following Maldivian politics with great interest – one of the current issues involves bribery allegations concerning GMR, denied by the Speaker of Parliament Abdulla Shahid and Leader of the Opposition Ahmed Thasmeen Ali, involving them travelling to Delhi on tickets purchased by GMR. Once and for all – has GMR had any contact with the Speaker of Parliament or the Leader of the Opposition?
AH: I think for the interests of clarity, we are extremely privileged to have this opportunity to manage the airport, and the GMR Group will at all times want to confine itself to that responsibility – and nothing else. Because that’s what we’re good at – we are no good at politics. And so we try to stay away from issues such as those.
What I can tell you is that any of the meetings and discussions that we have with anyone in government today have been open, well-known and available to the public. We go to public meetings, and we have other stakeholders present in these meetings. So for us, there is no question of anything occurring that would be shrouded in secrecy, or not known to the public.
Certainly I can tell you I have no knowledge of anything like that taking place. This seems to be something going on between people outside of GMR, although somehow we have appeared in the frame.
Those parties allegedly involved will be able to determine between themselves what is fact and what is fiction.
JJ: Former Deputy Opposition Leader Umar Naseer has claimed he has a letter from Sri Lankan Airlines confirming the authenticity of tickets purchased by a travel bookings company used by GMR, FCM Travel Solutions [shows ticket]. Has GMR flown these two individuals to Delhi?
AH: We don’t have a travel company, we use different travel service providers – we don’t use a defined company. I can’t comment on what Sri Lankan is saying because that information is privy to the airline that made the booking. Certainly anything we do is in the public domain. So if that were the case, it would be something publicly known and something people would be aware of.
This is something between the parties, the airline, and those who allegedly have been involved in purchasing whatever, and who are making the allegations. We honestly wouldn’t be able to comment on that. Because we have no knowledge of this, to be quite honest.
JJ: Have GMR made any efforts to determine the the source of the opposition to the airport, or the concerns of the coalition of parties opposed to it?
AH: No, because we have decided very clearly that our remit is to manage the airport, and we feel it is important to confine ourselves to this remit.
Otherwise it becomes very easy to confuse our mandate here and what people may perceive we are here to do. All of our attention is focused on the airport and demonstrating that we are an airport operator that will be responsible and respectful of the society and culture, and the laws of the Maldives.
As a result of that, I don’t think you would find us doing anything that goes beyond the boundaries of this airport, other than the relationships with those involved who have anything to do with the development of the airport.
JJ: This opposition coalition group have previously said they may take back the airport if elected, suggesting this could potentially become a campaign issue. Are you worried that a change of government could precede nationalisation spree?
AH: No, it’s not really a concern for us. Because quite frankly we are very pleased with the transparent process in which the bid was managed and assessed and awarded, and supervised by an independent body.
I think once people see the new airport, nobody is going to want to undo what has happened to it. We have staff who are motivated and engaged and telling us that this is an environment very different to the one in which they were working before, and they are very excited by these changes. And we have stakeholders who have welcomed the changes we have made until today.
Passengers coming through this airport haven’t been telling us that there is something they don’t like about how the airport is being managed. So our job is to manage the expectations of consumers and stakeholders to transform the airport into a much better experience. I think by doing that, we will address any concerns people outside the airport community have about us being suitable people to run the airport.
I would like to say that this airport belongs to the people of the Maldives, and nothing is going to change that. We may have financial responsibility for the airport, but physical ownership of the airport will always remain with the people of the Maldives.
What we are doing is continuing the evolution of the development off this airport from the volunteers who in the 1960s came to build it through sweat and toil into what it is today. This evolution continue, as will growth in tourism and trade. We are simply a guardian, a custodian of this national economic asset.
JJ: No concerns about sea level rise?
AH: No. When we became involved in the bid process we engaged three leading companies who are at the forefront of analysing geophysical activity, climate change and the impact rising sea levels.
What we can tell you today is that the risk of rising sea levels coming above the land is so low that it’s not even considered in the insurance premiums for the Maldives.
Insurers are notorious for considering even unimaginable risks, so I can tell you that if no insurance company considers this in any of their policies for the Maldives, we think that the risk is pretty low.
We are the largest single investor now in the history of the Maldives, and to make this kind of investment we would have had to had confidence that this investment would survive not just the term, but leave a lasting legacy. Beyond 25 years we want people to remember what happened while GMR was here. So it is not in our interest to invest in something that may not be here for the full term – and that term goes beyond the concession period.
The Maldives territorial waters are regarded worldwide as a beautiful and popular setting for desert island holidays, but though the country is about 1,800 miles from the volatile coastlines of Somalia, the island nation is increasingly concerned about becoming the target of potential pirate attacks.
Maritime protection experts and European diplomats linked to coastal security around Somalia have told Minivan News that the Maldives has the potential to become a target for pirate vessels, forced away from African waters as a result of political upheaval and maritime security crackdowns.
Although there is no evidence from Maldivian security officials that national interests have been threatened so far, fears have grown over maritime security and possible acts of piracy in Maldivian waters.
In light of these security concerns, the Maldives National Defense Force (MNDF) has said it is working alongside the Indian Navy as part of an ongoing collaboration to patrol the country’s territorial waters in attempts to prevent “terrorist acts” such as piracy that it has claimed are a “central concern” to the nation’s maritime security.
MNDF Major Abdul Raheem said he was concerned by the threat of possible attacks on “cargo ships within Maldivian waters by Somali terrorists”.
Several incidents of Somali nationals arriving in the Maldives in dinghies becoming lost at sea were reported during the 2010.
Two days (November 28) after the taking of the Malaysian vessel Albedo, a dinghy containing seven Somali nationals was brought ashore after it was discovered in Gnaviyani Atoll. The Maldives National Defence Force (MNDF) discovered a bullet shell during a search of the vessel.
On November 30, a second dinghy containing three Somali nationals was discovered by a Maldivian fishing near Thinadhoo in Gaafu Dhaalu Atoll.
The captain of the fishing boat, Mohamed Hussain, told Minivan News that one of the men had a stab wound in his neck and was seriously injured.
Such incidents have led to allegations that piracy originating in Africa may have reached the Indian Ocean – suspicions that are yet to be proven beyond circumstantial evidence.
Raheem confirmed that the MNDF has yet to uncover any terrorist acts having been conducted by Somali nationals or any other groups linked to piracy in its territorial waters, but added that the authorities remained “on alert”.
As part of joint operations with the coastguard and Indian Navy, Raheem told Minivan News that special patrols are being conducted in the Maldives territorial waters frequently in an attempt to try and preempt acts of piracy or terrorism in a country that is 99 percent sea. “We have not set a date when we will stop these operations, they are still continuing,” he said.
A European diplomat familiar with the EU’s anti-piracy policy around Somalia said that some attacks by Somali pirates had occurred within 300 miles of the Indian coast and that there was a trend for some of these groups to move further away from Africa and deeper into the Indian Ocean.
“We believe that this trend is due to the fact that the pirates are following the vessels – as merchant ships increase their distance from Somalia in order to feel ‘safer’, the pirates follow them resulting in attacks much farther east than ever before,” she said.
As merchant ships have increased their distance from Somalia in search of “safer” transport routes, European defence experts believe that pirates operating from the country have followed in pursuit.
“The pirates will follow the prey,” she explained. “If they can find vessels in or around the Maldives, they will probably attempt to pirate them.”
On a strategic level, the diplomat added that there was “no reason why attacks would not take place in the vicinity of the Maldives”.
Taking the Seychelles as an example – the country is closer to Somalia than the Maldives – she suggested that any pirates contemplating attacking the Maldives would follow a similar pattern.
However, the Seychelles coastguard in collaboration with the European Union Naval Force Somalia (EUNAVFOR), which under the Operation Atalanta military programme has aimed to try and limit the growth and scale of Somali piracy, has recorded some successes.
“Coordinated action can disrupt attacks but there is simply too much money and reward involved to deter attacks significantly,” she said.
From an EU perspective, restricting pirates’ “freedom of manoeuvre” is a major preventative measure, helping to ensure persecution and imprisonment for any individuals caught performing acts of piracy. The adoption of so-called Best Management Practices (BMP) by individual ships could also be adopted by Maldivian vessels wherever possible to further reduce possible attacks through security measures and evasive manoeuvres, according to European officials.
More information on BMP practices can be found here.
The European diplomat said that the current piracy problems emanating from Somalia were the result of instability on land, an area she said EU mandated training missions were being focused to try and better train Somali forces for protection.
Tim Hart, a security analyst specialising in piracy originating from the Horn of Africa for the Maritime and Underwater Security Consultants (MUSC), agreed that despite the implications piracy has on the oceans, its origins and solutions remained a landlocked issue.
“Piracy stems from problems on land and will not be stopped until this is tackled,” he said. “Traditional reasons [for piracy] usually extend from strong maritime communities and lack of law and order on land.”
Hart said that from his experience, Somalia was a nation with a “perfect storm of factors” such as a strong proximity to shipping lanes and proliferation of weapons that had contributed to an “extremely high level” of piracy stemming from the country.
With popular shipping routes moving increasingly eastwards from Somalia due to concerns over the dangers of sailing around the Horn of Africa, Hart claimed historical evidence has shown pirates follow these routes, which may in turn have led to the current concerns being expressed in the Maldives.
“Somali pirates have shown over the last few years that they are prepared to move thousands of miles from the coast to target rich environments,” he said. “The Maldives has a popular route for vessels transiting from the Gulf of Aden to the Far East and also for vessels transiting to the Far East from the Middle East.”
As a business, Hart said piracy has originally stemmed from local Somali groups taxing foreign fisherman illegally working within Somali waters and then hijacking their vessels for ransom.
Early successes led the pirates to become more ambitious in terms of the size of vessels they were targeting, Hart added, with the result that by 2008, the numbers of Somali people turning to piracy for survival or profit “exploded”.
This growth in numbers also saw a correspondingly large area being affected by the country’s piracy.
“In 2008 [piracy] was mostly limited within the Gulf of Aden area,” he said. “It moved further into the Indian Ocean in 2009 and in 2010 it has expanded even further east so that in the last 7-14 days, the majority of the attacks have been around 69-70 E – only a few hundred miles from the Maldives.”
As any expanding global business, Hart explained that piracy has become “a huge industry” for Somalia due to being “extremely lucrative.”
“The increase in the number of Somalis involved – represented by an increased amount of groups that operate as well as vessels held at any one time – shows that [piracy] still holds a great attraction for the Somalis,” he explained. “And there is still not a sufficient deterrent to prevent pirate groups from operating.”
Responding to ongoing patrols and the special operations being conducted by Maldives defence forces and the Indian Navy, Hart said that by taking the example of similar military commitments in the Gulf of Aden, such preventative measures had been found to effective in deterring the likelihood of piracy.
Nonetheless, with an apparent expansion into the Indian Ocean and other maritime areas, anti-piracy resources were being stretched to their limits.
“A comparison that is often made [to preventing piracy] is that it is like trying to ‘police the US/Canada border with a scooter’. The area [involved] is larger than the size of mainland Europe. However, when combined with effective onboard measures, pirate effectiveness has decreased in the last 12 months.”
Rob from the rich
While the extraordinary profitability of piracy has led to a surge in the practice – largely driven by the willingness of shipping companies (and their insurers) to pay the ransoms and get on with business, the root cause of the problem is perhaps more socioeconomic than mercenary.
Somali pirates, when captured and questioned, claim that the stealing of fish by giant trawlers and the illegal dumping of toxic waste in their territorial waters has left them little choice but to turn to piracy.
Their claims are not without some merit: in 2003-2004, the UK’s Department for International Development estimates that Somalia – one of the poorest countries in the world – lost US$100 million dollars in revenue to the illegal fishing of tuna and shrimp by foreign-owned trawlers.
As for the pirates’ claims that toxic waste was being dumped in the country’s EEZ following the collapse of the government in 1991, evidence emerged in 2004 following the tsunami when the rusting containers washed up on the coast of northern Somalia.
This side of the piracy debate – that the rise in Somali piracy was fermented by a decade of abuse by the developed world – was reported by Project Censored as the third most under-reported story of 2010.
“There is uranium radioactive (nuclear) waste. There is lead, and heavy metals like cadmium and mercury. There is also industrial waste, and there are hospital wastes, chemical wastes—you name it,” United Nations Environment Program (UNEP) spokesman Nick Nuttall told Al Jazeera.
As a result, “hundreds of [Somalis] have fallen ill, suffering from mouth and abdominal bleeding, skin infections and other ailments.”
“What is most alarming here is that nuclear waste is being dumped. Radioactive uranium waste that is potentially killing Somalis and completely destroying the ocean,” he said.
The UN envoy for Somalia, Ahmedou Ould-Abdallah, revealed that private companies were paying corrupt government ministers and even militia leaders to dump the waste, but that even this token reciprication had disappeared with the demise of the country’s government.
Following these revelations, the European Green Party released copies of contracts signed by two European companies, Achair Partners, and an Italian waste broker, Progresso, with Somali warlords detailing the exchange of 10 million tonnes of toxic waste for US$80 million.
Nuttall notes that disposal of such waste in Europe costs US$1000 a tonne. Somali warlords, in contrast, were willing to accept as little as US$2.50 a tonne.
As a result – and perhaps unsurprisingly – piracy enjoys the widespread support of the Somali population – even across fractious tribal and ethic boundries. Project Censored points to a survey conducted by independent Somalia news site WardherNews, which fond that 70 percent of the population “strongly support the piracy as a form of national defense of the country’s territorial waters.”
In an article for the UK’s Independent newspaper, journalist Johann Hari claims “You are being lied to about pirates”.
“Do we expect starving Somalians to stand passively on their beaches, paddling in our nuclear waste, and watch us snatch their fish to eat in restaurants in London and Paris and Rome? We didn’t act on those crimes – but when some of the fishermen responded by disrupting the transit-corridor for 20 percent of the world’s oil supply, we begin to shriek about ‘evil.’
“If we really want to deal with piracy, we need to stop its root cause – our crimes – before we send in the gun-boats to root out Somalia’s criminals.”
It could be that Maldivians – contending with rising sea levels potentially exacerbated by the industrialisation of the developed world – have more in common with the Somalis washing up on their islands than they may think.
It could be that Somali fishermen are battling their own set of man-made environmental problems – successfully and profitably – with the only means left to them.
“It is said that acts of piracy are actually acts of desperation, and, as in the case of Somalia, what is one man’s pirate is another man’s Coast Guard,” writes Mohamed Abshir Waldo, of Somalia Wardheer News.
A strong rebound in tourism and government policy efforts to redress macroeconomic imbalances have stabilised the macroeconomic situation and spurred growth in 2010, but a fractious political environment and accelerating international commodity prices remain key challenges, according to a World Bank Economic Update Report published last week.
The report notes that fiscal consolidation – reigning in the ballooning budget deficit with austerity measures and the introduction of taxation on business profits – “remains the foremost challenge in the coming years”.
“A less destructive political climate” will be needed to maintain recent positive developments, the World Bank cautions.
“Despite having posted better-than-expected fiscal results in the first half of the year, the country will be hard-pressed to sustain this in the medium term,” it reads. “However, despite the challenges, the government remains steadfastly committed to fiscal consolidation.”
An internal report by the World Bank, obtained by Minivan News in May, revealed that the doubling of spending on state salaries in 2007-09 crippled the country’s economy, and left the Maldives “facing the most challenging macroeconomic situation of any democratic transitions that has occurred since 1956.”
Fiscal consolidation
While maintaining public sector pay cuts and other austerity measures introduced in October 2009 was “one of the government’s main achievements”, the most recent report notes that it is “highly likely that the forthcoming budget for 2011 will restore the civil service salaries to previous levels.”
With the restoration of civil service salaries in January 2011, salaries of police and army officers as well as political appointees will also be simultaneously restored – “thus completely reversing the pay cuts for all categories of public sector workers.”
The report flags slow progress on “rightsizing the public sector”, noting that planned layoffs “have not been carried out to a significant extent.”
Moreover, public sector workers transferred to corporatised entities – currently state-owned – “remain directly within the payroll of the government.”
In addition, the government’s pledge in May to the seven percent contribution from public sector employees to the pension fund “would likely result in an additional Rf94 million (or 0.5 percent of GDP) in expenditure over the remaining seven months of the year.”
The new structure of island and atoll councils is meanwhile expected to cost the government an extra Rf173 million (US$13.5 million).
As of July, the fiscal deficit was 15.5 percent of GDP “against a target for the year of 18.2 percent of GDP.”
Total expenditure during the first seven months of the year was meanwhile below the target of Rf6 billion at Rf5.25 billion “due largely to a cut-back of non-salary operating expenses and capital expenditure.”
However, total revenue as of July was 12 percent below budget as a result of marginal increases in import duty collection and tourism tax receipts.
While the budget for 2010 anticipated that parliament would pass legislation for Business Profit Tax in December 2009, the “earliest likely start date” for the tax is now expected to be the first quarter of 2011.
The report notes that continuing delays to passing the bill “will hurt the fiscal position.”
Transformation in monetary policy
The Maldives Monetary Authority (MMA) ceasing printing money to finance the budget deficit – deficit monetising – in September 2009 was “a transformation” of monetary policy in the Maldives.
As a result of the successful OMO, “[net] credit outstanding to the government from the MMA has dropped, thereby reaching the target of the IMF program for end-August.”
The MMA has also been assisting the government to “broaden the base of the domestic T-bill [Treasury Bill] market”, augmenting the existing portfolio of government securities in July with the introduction of the 182-day T-bill.
The report notes that despite a gradual recovery in global commodity prices, “national headline inflation remains benign and in single digits” at 6.3 year-on-year at August 2010, down from 6.9 percent in July.
In August inflation at the atolls dropped to just 4.4 percent, despite being traditionally higher than in the capital Male’.
Public sector credit (PSC) meanwhile continued to stagnate in 2010, contracting one percent by July.
“Business sentiment remains subdued, with work on resort construction having hit a snag, and the domestic banking system not showing enthusiasm for credit expansion,” it finds.
However, despite recording “the fastest growth in PSC for nearly 20 months – 1.5 percent –driven mainly by credit to the resort sector” in July, “it may be a while before the PSC shows a sustained sign of recovery, with the global conditions still weak.”
Widening current account deficit
While the Balance of Payments situation improved significantly in 2009 “with a faster contraction in imports relative to exports”, rising import prices have contributed to a widening trade deficit.
“During the first seven months of 2010, total import growth (12.3 percent) outstripped export growth (nearly 9 percent), and resulted in a widening of the trade deficit to US$ 506.5 million – 13 percent higher than in 2009,” it reads.
“If global commodity price growth does not accelerate, the trade deficit is likely to remain manageable during the rest of the year, and coupled with higher inflows from tourism,15 the overall current account deficit is expected to narrow further in 2010 to 27 percent of GDP.”
As the Maldives is “one of the most open economies in the world” with imports accounting for over 90 percent of GDP, the report warns that rising international food and fuel prices could worsen the trade deficit, put pressure on foreign exchange reserves and increase consumer price inflation.
“One positive aspect of the rising value of commodity imports is that fiscal outcomes could improve, if planned expenditure cuts are implemented, since 30 percent of government revenues come from import duties,” it concludes.
Despite government pledges to ensure all woman across the country are being given basic support and education, one award-winning female entrepreneur believes that the Maldives currently provides little assistance for educated women hoping to own a business or pursue career development.
Aminath Arif, founder of a vocational training and community development group for young people called Salaam School, told Minivan News that she believed the government is on one hand very committed to grass root education to allow women to provide for themselves on a basic level. However, she added, efforts towards encouraging women to establish businesses of their own and become entrepreneurs were very limited.
Arif last month received a South Asian Association for Regional Cooperation (SAARC) Women Entrepreneurs Excellence Award for her work in trying to provide training for women and young people across the country’s secluded islands and atolls.
The awards were handed out as part of an exhibition outlining the work of SAARC’s Women’s Entrepreneur Council that represents female business from across the 12 states that make up the association’s membership; such as the Maldives, Pakistan, Bangladesh, Sri Lanka and India.
Arif was one of 12 women to receive the award at the ceremony at the Taj Coromandel in Chennai, in recognition of her “significant contribution to women and youth [and] her initiative in establishing an institute that reaches nationwide, and her innovative approach to address a very challenging issue.”
Annisul Huq, President for the SAARC’s Chamber of Commerce and Industry, addressed attendees during the award ceremony and exhibition, calling for greater government focus on empowering more women to become entrepreneurs in South Asia.
Arif told Minivan News that in the Maldives, women face a unique set of challenges pursuing business ambitions, preventing them from competing equally with male entrepreneurs who are institutionally-favoured by current regulation.
“We live in a very male environment,” she said. “Most women are resigned to it.”
Arif conceded that it was important to accept that a number of Maldivian men are also being marginalised in the hunt for skills and employment within the country, particularly on some islands where young people are provided with limited opportunities upon leaving school.
This lack of opportunities was seen by the Salaam School founder as being a major contributor to a sense of restlessness and lack of self confidence in some individuals. Beyond these shared challenges though, she claimed that women face additional difficulties and stigmas related solely to their gender rather than financial or business acumen.
One particular example, Arif said, were board meetings.
“When a woman sits across a table, she can face attitudes from male colleagues or peers that are difficult to overcome even with a solid business plan,” she explained.
Citing banks as another example of the challenges faced, she claimed that both male and female bank workers had a tendency to look less-favourably on a female business person looking for loans or financial support, solely on the issue of gender and societal attitudes.
In order to try and overcome potential challenges of gender discrimination in business, a step-by-step approach was needed to help encourage a greater entrepreneurial spirit in Maldivian women, Arif suggested.
Arif said that Salaam School was offering vocational certification to women in areas such as office and administration skills, in the hope that females can work closer to home and both support family and develop careers of their own. These skills are increasingly being offered among training in areas such as hospitality and literacy.
The Maldives National Chamber of Commerce and Industry (MNCCI) suggested that in its experience, it did not believe it was women, but rather small and medium businesses as a whole, that were being the hardest hit in the current national finance market.
“We are not going to differentiate between genders in business,” said a spokesperson for the chamber, who asked not to be identified.
With five of its 18 board members represented by women in fields such as resort ownership, the MNCCI said that its primary concern for its members was in trying to keep small and medium enterprises competitive against larger groups that hold more extensive resources and funding.
In the current market, the spokesperson claimed that business legislation in the Maldives was failing to differentiate between larger and more modestly-earning companies.
Offsetting societal concerns about women being at a disadvantage in the business world, the chamber spokesperson claimed that the commercialised banks within the Maldives looked towards “low risk investments” as a guiding principal.
The MNCCI said it believed therefore that banking groups in the Maldives looked solely for good collateral on loans rather than at specific genders to inform their decisions on business.
Director of Adhaaran company that operates Hudhuranfushi resort, Mohamed Mahdy, has said he was unaware of allegations that a tourist couples’ ‘dream holiday’ was ruined by ‘food poisoning’ in March 2008.
The Liverpool Daily Post reported that the holiday of a couple that went to Hudhuranfushi to celebrate the husband’s 50th birthday was ”ruined by food poisoning.”
The paper reported that the couple were now suing their tour operator Thomson.
It quoted the husband as saying “We were served undercooked food, as well as food that was recycled and served up two days running. The pool and the toilets were filthy. We were so excited about the holiday. But, instead of enjoying it, I spent most of our time being violently ill.”
Mrs Wears was so ill with severe diarrhea that a doctor had to be flown in from another resort to treat her, said Liverpool Daily Post.
”I am very sure that such an incident did not take place in the hotel in March,” Mahdy said. ”I really do not think that is true.”
He said that customers sometimes complained about issues, “but there was no major issue like that.”
Liverpool Daily Post reported a Thomson spokeswoman as saying that “Thomson can confirm that five customers reported illness while staying at the Hudhuranfushi Island Resort, Maldives, in March, 2008. We are currently in talks with the no win, no fee law firm that is representing these customers.
“Hudhuranfushi Island Resort continues to be extremely popular with our customers, and we are confident that guests due to travel to the resort in the future will experience the high levels of quality and standards they expect from a Thomson property,” said the spokeswoman, according to Liverpool Daily Post.
After months of political wrangling and counter allegations, as the clock turned one minute past midnight this morning Indian infrastructure giant GMR took the reins of Male’ International Airport as part of an overhaul it claims will help “increase the brand value” of the Maldives.
In a consortium with Malaysia Airports Holdings Berhad (MAHB), GMR says it will kick start a 180 day programme to try and improve service, efficiency and profitability of the site ahead of an US$511m expansion project that includes the construction of a new airport terminal by 2014.
The airport consortium, which saw off competition from a number of rival bids to win a long-standing contract to privatise the running of the country’s central transport hub, made a point of trying to offset concerns about the intention of foreign ownership and its potential impact on Maldivian workers.
“The airport belongs to the people of the Maldives,” said Kiran Kumar Grandhi, Business Chairman of Airports for the GMR Group at a function to commemorate the new management structure. “This consortium hopes to bring the best of technology and architecture and service to the airport.”
A coalition of opposition political parties formed an alliance back in June designed to try and protest against the deal on the grounds of nationalistic interests that included mps from the Dhivehi Qaumee Party (DQP), Dhivehi Rayyithunge Party (DRP), Jumhooree Party (JP) and the People’s Alliance (PA).
However, speaking during today’s handover ceremony on Hulhule’ Island, Mahmood Razee, Minister of Economic Development and a Maldives Democratic Party (MDP) member, claimed that the privatisation of the airport is aimed to directly benefit Maldivians as well as foreign travellers.
“It [the airport] belongs to all of us, to all Maldivians,” he said.
Razee stressed that the government would therefore continue to work with the shareholders of the airport consortium even under “difficult circumstances” such as parliamentary debate and legal wrangling. The Minister of Economic Development added that he views privatisation across the nation’s transport networks and economy as vital for future development.
“We have worked with the private sector,” he added. “We will continue to work with the private sector.”
The comments were echoed by President Mohamed Nasheed who said that the levels of requirement investment required at the airport, which he claimed could be called “the Bucket International Airport”, were substantial.
According to figures given by the president, at least US$300m would have been needed for the development from a government budget that he said was already stretched spending Rf1 billion on existing loans.
As the urgent need to develop the airport was “an undisputed truth” accepted by all, President Nasheed continued, vowing that the government “will not let anyone obstruct the country’s development.”
Airport opposition
DRP Leader Ahmed Thasmeen Ali told Minivan News that a coalition of political parties formed in opposition to the GMR airport deal remained committed to a Memorandum of Understanding (MOU) focusing on legal recourse to try and prevent the privatisation agreement.
Despite the handover already having taken place this morning, the opposition leader said that the coalition of political parties hasn’t yet “exhausted legal avenues” related to their opposition of the privatisation.
“We simply believe the deal is not in our national or security interests,” Thasmeen said. “With the privatisation of other [existing or soon to be] international airports in the north and south of the country, the state will not have an airport under its control.”
From a stand-alone DRP position, Thasmeen said his party was not strictly against privatisation, but the party would judge any new business propositions put forward by government on a case-by-case basis.
Debate over the issue of privatisation has raged for many months for and against allowing privatisation since GMR and MAHB were first contracted to oversee the airport expansion project back in June.
Deputy Leader of the DRP, Umar Naseer, told Minivan News on June 28 that ” if [the operators] allowed it, an Israeli flight can come and stop over after bombing Arab countries.”
The government has alleged that opposition to the airport deal stems from the “vested interests” of certain MPs, several of whom it arrested following the resignation of cabinet on June 29 in protest against the “scorched earth politics” of the opposition-majority parliament.
Initial 180-day plan
Beyond possible ongoing political and legal discourse, Andrew Harrison, new CEO of GMR Malé International Airport, pointed to greater efficiency in the day-to-day service of the airport as a key focus for the first 180 days of management.
As part of this programme, Harrison announced that an expansion of capacity at the airport was immediately required to allow for more flights to be handled simultaneously. In addition to customer handling capacity, a number of new x-ray scanners and service counters are also set to be provided over the period to speed up waiting times during check in and departure, he claimed.
Beyond operational commitments, Harrison said that the 180 day programme also aims to make a number of changes to the look of the arrivals and departure plaza.
This cosmetic overhaul is expected to include a number of new eateries and retail outlets to be situated across the site and also alongside the waterfront in a bid to boost the “guest experience” and play up the local environment.
Staff working at Kuredhoo Island Resort have alleged that the resort five months ago issued a notice stating that it would not be renewing the contracts of female staff members wearing the headscarf, and had since dismissed at least one staff member over the matter.
A staff member currently working at the resort told Minivan News that a notice regarding the matter was issued by the resort five months ago.
“There was a female staff member who wore the headscarf who was asked to leave her job two months ago because the resort’s management refused to renew her employment contract [because] she wears a headscarf,” he claimed.
A second staff member Minivan News spoke to also claimed the resort had notified staff that it would not renew the contracts of staff wearing the headscarf.
The allegation first appeared on the Dhivehi Post news blog, which quoted a female staff member at the resort as saying that elderly women living on a nearby island, employed by the resort for cleaning jobs, were issued the same notice.
Human Resources Manager at Kuredhoo Khadeeja Adam said she did not wish to comment on the matter and referred Minivan News to the resort’s General Manager.
Kuredhoo’s General Manager Andrea Nestle also refused to comment on the matter, but said the allegations she had read in her translation of the Dhivehi Post report were incorrect. She referred Minivan News to the head of Champa Trade and Travels in Male’, Abdulla Saleem.
Saleem told Minivan News that the resort policy was established by the resort’s management team, and said he had nothing to do with the policy.
”The management team works very independently and we have no influence on them,” he said.
Secretary General of the Maldives Association of Tourism Industry (MATI), Mohamed ‘Sim’ Ibrahim, told Minivan News that the issue was a “very sensitive” one, “because some [guests] get a bit taken aback. Some are a bit worried about it because they associate the dress with fundamentalism and militant Islam.”
“We don’t want to encourage people to wear the full burqa when they are serving tourists at the front desk, the first line of contact with guests,” he said.“But we don’t have a problem with them working in the office, or in general. It’s up to the resort owner.”
He noted that the right to wear the headscarf was a fundamental right, but that it was also a legal right for a resort to designate its own uniform and dress code.
The issue of discrimination, he noted, had led to “huge problems” in countries such as France.
A French law passed in 2004 banning the display of religious affiliation in schools, including dress and iconography, sparked protests across the Muslim world and also in countries such as the United States which expressed concern that the restrictions violated the France’s international human rights commitments.
In September 2010, the French Senate passed a bill 246 to 1 making it illegal to wear veils covering the face, with fines of €150 for women and €30,000 for men who forced their wives to do so, doubled in the case of minors.
Amnesty International condemned the French bill as a violation of freedom of expression.
“States have an obligation under international law to respect the human rights of everyone without discrimination on the basis of race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status; to protect them against abuses of those rights by third parties, including by private actors within their families or communities; and to ensure they are able to exercise those rights in practice,” the international humanitarian organisation claimed.
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