President Mohamed Nasheed has ratifed parliament’s Tourism Goods and Services Tax (GST) Bill, which will impose a levy on most products and services sold to tourists by the resort industry.
Once implemented, the GST will apply to room rates charged by resorts, hotels, picnic islands, guest houses and tourist vessels, as well as all goods and services sold to tourists by these businesses.
The GST will also apply to domestic transportation of tourists, travel planner charges, and goods and services sold to tourists by dive schools, shops, spas and water sports facilities by resorts, guest houses and tourist vessels.
Deputy Minister for Tourism Mamduh Waheed explained the new legislation, which would impose a tax of approximately 3.5 percent, was intended to the offset the revenue lost through standardising land tax charged to resorts and scrappage of the ‘bed tax’.
Resorts currently pay a flat rate of US$8 per occupied room, per night, however the resort industry has criticised this as a disincentive to increase capacity and promote expansion, and limit potential revenues in the future.
Presently the government has been making anywhere from US$3,500-20,000 per bed every year, generating a total of US$47 million in revenue from the bed tax per year.
Under the amended Tourism Act, arbitrary lease agreements will be replaced by a blanket payment whereby if the rent charged for less than 200,000 square metres is more than US$1 million, the rent is set at US$1 million per year, and if the rent charged is less than US$1 million, the rent will be set at a rate of US$8 per square metre.
The Act stipulates that US$1.5 million per year will be charged for 200,001 to 400,000 square metres, while where the rent paid for land greater than 400,001 square metres is more than US$2 million, the rent of the land will be set at US$2 million per year.
The new land tax scheme, which was originally proposed by MDP MP Ibrahim Mohamed Solih, reduces the government’s income from the tourism sector from Rf 1900 million (US$148 million) to about Rf 1300 million (US$101 million).
“Before the lease rent was set individually for each property and it was very easy for a Minister or the government to modify it,” Mamduh explained, “although there was an index sometimes used to calculate the price based on proximity to international airports.”
Basing land tax on a square-metre basis “actually reduces the rent of most properties,” Mamduh said, explaining that the new GST was intended to offset this loss.
“Both of these will be good for everyone, especially investors, now the ministry cannot play with the axes any more.”
Opposition DRP MP and former Tourism Minister Abdulla Mausoom has previously told Minivan News that a standardised land tax scheme was “not in the best interest of the country”, because fixed prices did not give the government flexibility when investors were willing to pay a better price.
“The Maldives is very small and our natural resources are limited,” Mausoom said in April.
“We should facilitate and investor-friendly environment without eliminating the competitiveness of the market.”
A Lithuanian company has unveiled plans to build an ‘Island of Blondes’ in the Maldives, a resort it claims will be staffed exclusively with “beautiful blonde young women”, featuring “entertainments”, spa centres and an education centre “which will teach female guests to always be perfect and look great.”
The resort will be constructed under the Lithuanian brand Olialia, managed by the small European country’s largest newspaper, Vakaro Žinios. The company also operates a pizzeria, payment card, limo and bus service, and sells ice-cream, soft drinks, chips, and computers decorated with Swarovski crystals, and runs parties at popular Lithuanian nightclubs.
Local tourism industry website Maldives Traveller revealed that the project was expected to open in 2015 and would be funded by investors from Lithuania, Russia, UK, Germany, United Arab Emirates and an undisclosed Maldivian travel company.
In an interview with Maldives Traveller, Olialia’s Giedre Pukiene told the website that the company was already in negotiations “with the owners of several atolls, who are ready to cooperate in the creation of the island of blondes.”
The working title of the resort is to be ‘Olialia Paradise’, Pukiene told Maldives Traveller, but noted that this was subject to change.
The project will also include the creation of an airline and yacht service for visitors to the island, both staffed exclusively by blondes.
“The pilots and stewardesses on the planes will also be blonde only,” Pukiene confirmed.
On paper, the project is likely to encounter logistical difficulties. Resorts in the Maldives are obligated to employ at least 50 percent Maldivian staff who naturally have dark hair. Olialia has not revealed whether local staff will be required to use bleach.
State Minister of Tourism Mamduh Waheed said he was unaware of the proposed project, but noted that the Ministry of Tourism had no involvement in negotiations between operators and leaseholders.
“The Ministry officially has no role to play in negotiations, and I think it would be out of line for us to do so, but we certainly facilitate and assist those operators seeking to acquire property,” Mamduh explained.
If it goes ahead, the project would take the country’s tourism industry in a different direction to that proposed in May by visiting Islamic speaker Dr Zakir Naik, who noted that investing in a resort profiting from the sale of alcohol was already technically haram (prohibited), and recommended the country encourage investment in halal (permitted) tourism.
Such resorts, he suggested, should be “exclusively halal, free of pork and alcohol, and with proper segregation and dress code – it will be a benefit.”
President of the Adhaalath Party and State Minister for Home Affairs, Sheikh Hussain Rasheed, said that even if a company attempted to open a resort as the one proposed by Olialia, ”nothing against the Tourism Act can be conducted in the Maldives.”
”Tourism is not bad itself, but it can also be conducted in a bad way,” he said. “Ever since the beginning of tourism in the country has become broader day to day, and the government has established the Tourism Act to maintain and organise the industry,” said Sheikh Rasheed, explaining that the employment of female staff was also regulated by the Tourism Act.
”There should also be a percentage of Maldivians in all the resorts, according to the Act,” Sheikh Rasheed explained. ”I don’t really think the Tourism Act allows such an island to be developed in this country.”
State Minister for Islamic Affairs Sheikh Mohammed Shaheem Ali Saeed had not commented at time of press.
Head of the Maldives Association of Tourism Industry (MATI), Sim Mohamed Ibrahim, said he thought the idea was “beyond a gimmick” and “so totally spectacular and different a business model that it could very well succeed.”
Sim said he did not believe such a resort should encounter objections from the conservative establishment in the Maldives, “because if [the country] objects by singling out a physical characteristic, we’re not going to attract anybody.”
The ‘Island of Blondes’ is not the first ambitious resort development to be proposed in the Maldives.
In March the government signed an agreement with Dutch Docklands to develop a gigantic floating golf course, holding a signing ceremony in the President’s office.
”Golf has a good market in the world, and most of our resorts do not have a golf centre due to lack of space,” observed Press Secretary for the President Mohamed Zuhair at the time.
Hotelplan is a Swiss-based tour operator that has operated in the Maldives for 25 years and is a key player in the Italian market, bringing 20,000 tourists to the country each year. Minivan News spoke to the CEO of Hotelplan Italia, Marco Cisini, during his recent visit to the Maldives.
JJ Robinson: What is the occasion of this visit?
Marco Cisini: We are ending a 25 year long love story with Maafushivaru (in Ari Atoll) and Universal Group. We decided it was very important we come and visit before the island closed and is refurbished and upgraded. After that it will go to a new tour operator.
JJ: How has the market changed over 25 years?
MC: It has changed a lot – for a start, the number of flights arriving. A wide number of offerings have been built in last 20 years, and while there are islands at price, when the government identified the power of tourism it decided to increase the rates and taxes, for that reason a lot of deluxe hotels were built rather than four or three star properties.
The occupancy depends on the quality and quantity of clientele you can find for these products. Today the quality of the products – and the professionalism – has increased a lot. Quality in the Maldives is a target that has been reached, and while certainly some things could still be done better, generally the suppliers are well organised and it’s working very well.
We are pleased that the country is becoming much more modern and flexible in its ideas, and we remain good investors in this country because we believe in the future of this place.
At the same time we know there are new markets coming in, from Asia especially, that will absolutely give an international image to the country.
JJ: The market for tourism in the country has traditionally been very Eurocentric – have you considered broadening into these new markets?
MC: Hotelplan is an international company based in Zurich and is present in England, Switzerland, France and Italy. Obviously as the CEO of Hotelplan Italia I am looking at the Italian market, but as a company we are looking at these emerging markets.
However to sell product such as we are selling, you need to be well integrated into the [source] country and be identified as a country expert. It’s much easier to buy an existing company rather than build a new company in these emerging places. But we are absolutely watching the new potential for business.
JJ: What is unique about the Italian market?
MC: Italians like to have fun, and we try to create an atmosphere with our T-Club concept. The meaning comes from ‘tea’: the idea of it being an elegant moment in your day.
One friend brings another friend, friends bring families, and you spend time together in a group while not feeling you are in a group, doing activities that you cannot do alone.
We also try and add to the nature of a place, by bringing specialists such as astronomers, biologists – people who can really give the clients information about the environment. The aim is to have fun and to think.
JJ: The traditional image of Maldives tourism is that of a European in a beach hammock slipping a Pina Colada. Has this changed? Are tourists demanding more?
MC: I wonder. I hope. Everybody coming and lying down on the beach – that is the general mass identification. But everyone wants to be different to each other, and now people are looking for something new, a new experience, and new sensations. That’s why eco-concepts are important – thinking while travelling, and understanding where you are.
For example, you can say to someone: ‘Let’s watch a 50s movie.’ You might reply, ‘Nice, but it’s not my plan see a movie.’ But then I say ‘OK, if you do, the meeting point is at the jetty.’
So you jump on a boat, go to a real desert island with a sandy beach in middle of the sea, with a computer and a projector. All you see around you is water, and you are with 20-30 people sitting on the beach under the stars. This is a movie you will never forget your entire life.
It’s not important what you do, but how you do it – people are looking for these types of emotions. We know people on holiday are looking for something like this, but how do you give them an experience with such strong emotions?
Think of how many hotels there are in the Maldives and all over the world. To be different you cannot just be different in style and service, because people take these things for granted – they paid for it.
JJ: What are the particular challenges of operating in the Maldives?
MC: The challenges are many. Today the major challenge is the people. We found in our suppliers a lot of good people we have worked with for 20-30 years, and helped upgrade them in terms of business know how. Over the last 20 years people have learned and studied a lot, and the quality and organisation is much better.
The challenge in the beginning was to be a pioneer. You were discovering and building a destination with all of the problems of building something in the middle of the sea.
We put in a lot of effort to help people here to be able to make all these places – how to be organised, providing know-how, information, instruments… and we found a lot of them very open to learn. This is something you don’t find in every country, especially when you start as pioneer. A lot of people don’t see the potential future.
JJ: Do you consider the Maldives a politically stable environment in which to operate?
MC: I have to say that since September 11 there are no more stable places. One of the major ways to get attention from the world is through [violent] actions, and stupid people are everywhere. That exposes any country to risk – also my own country.
JJ: The issues of labour rights and industrial disputes have surfaced recently at several resorts. Is this something you think guests are interested in? Do they want to know that resorts are treating staff fairly?
MC: What I can say is that it’s not easy to manage an international group of people from many different countries who speak different languages and have different religions, and to respect all of them. As I told you, countries must build and upgrade themselves when they face international markets, and this takes time.
On the other side, this orientation to look for money everywhere has to include respect for people and labour laws. This must be done. In our experience we have never felt this was a problem – the staff at Maafushivaru were perfect.
JJ: Do you have plans to further expand in the Maldives?
MC: We looking for new destinations and new islands. We are following new developments in the southern part of the country, and we are one of the two operators present in the Gan project. The Maldives is a target for us, and we would like to be friends with this country and follow the directions it takes. We feel the need to be present and to protect the culture of this place.
JJ: The resorts have historically been kept separate from the rest of the country – at least as far as tourism is concerned. Do you think this will continue?
MC: I think in this environment it is not easy to combine cultures – especially the beach holiday concept. But we are trying to combine these things.
JJ: Some in the industry claim that a declining demand for luxury properties is becoming offset by a lot of demand for lower star hotels. Does your experience reflect this?
MC: In winter time, you have good clients in terms of potential for five star. There is no problem with demand in Winter. But in the Summer season it is much more complicated because of the proximity of places like the Meditteranean, which are similar in terms culture and have better weather.
In Summer the European demand must be combined with demand from other markets to rebalance occupancy – such as opening the Chinese and Indian markets here. But if the [resorts] think only Europeans can afford to fill the occupancy of these hotels all year long, it’s not enough. The demand is not enough.
Universal Enterprises has issued a statement announcing the return of guests to the Kurumba Maldives resort from August 26, following last week’s industrial action.
The statement said the company “deeply deplored” the actions of strike organisers at Kurumba last week, claiming they “sent employees armed with makeshift weapons to blockade the main kitchen and physically threaten staff serving meals to guests”.
Staff at the resort – the first in the Maldives – declared themselves on strike early last week, complaining of inadequate staff accommodation and food, discrimination and unfair distribution of service charges.
“As a direct result of the violent acts witnessed by guests at the resort, all guests at Kurumba Maldives vacated the resort, while a number of booking cancellations were made, and Kurumba Maldives operated with zero guest occupancy between August 23 and 25,” Universal said in its statement.
Universal claimed that striking employees had been acting “under significant misconceptions, particularly in respect of some crucial aspects relating to computation of service charge and wage policies.”
“However, despite having key financial staff on standby from late evening on August 21 until the early evening of August 23, Universal was prevented by the organisers of the action from providing accurate and detailed information to the employees.”
“The organisers of the action continued [a] pattern of threatening behaviour together with unruly demonstrations directly in front of guest areas, when the Universal delegation presented Universal’s promised response in the presence of a representative from the Ministry of Tourism and three officers from the Labour Relations Authority,” the statement read.
“Despite Universal taking immediate action to resolve the matters of contention, and furthermore despite Universal’s pledge to thoroughly investigate all employee complaints, the organisers of he strike took just ten minutes to unilaterally reject all of Universal’s proposals and incite roting on the resort,” the company said.
“Despite the rioting that took place, Universal persisted in its attempts to resolve the situation peacefully. However, despite repeated requests, and in particular attempts by the governmental officers to persuade them to meet for discussions, the employees refused to commit to a peaceful resolution of the dispute. As a result, both the Tourism Ministry and the Labour Relations Authority withdrew their representatives from the resort.”
The protest was resolved peacefully on August 23 after Universal withdrew its consent for employees to strike on the privately-owned island. A team of police then mediated the return to work of the majority of employees, while four resigned. 19 staff were taken into police custody at Dhoonidhoo pending an investigation into intimidation and vandalism. The Criminal Court last week ruled that those staff should not leave Male’ for a period of five days during the police investigation.
Universal claimed that during the rioting, “and in most instances in full view of the guests, senior management staff were pursued through guest areas by mobs, physically assaulted, received death threats and warnings of physical dismemberment, and generally put in fear for their lives.”
“Doors were battered down, and attempts made to prevent vessels from departing the island. Universal also notes that the three officers of the Maldives Police Service then on the island were manhandled, threatened with physical harm, subjected to gross verbal abuse, and even physically obstructed in the execution of their duties. In addition, the representative from the Tourism Ministry and the officers of the Labour Relations Authority were subjected to harassment and grossly intimidating behaviour, threats and verbal abuse.”
President of the Tourism Employment Association of the Maldives (TEAM), Ahmed Easa, who is also an MP of the ruling Maldivian Democratic Party (MDP), said claims of guests being intimidated and staff deploying makeshift weaponry “were nonsense”.
“All we tried to do was collect staff to sit down in an open area, and not even use a hotel building or property. These claims are total nonsense and an attempt to place blame on us,” Easa claimed.
He acknowledged that a staff member had chased the secretary of the resort’s General Manager, “after she used bad words”.
“Police were there the whole time,” he said, claiming that allegations of three police officers being manhandled by strikers were “probably rubbish”.
Sub-Inspector Ahmed Shiyam would not confirm whether police officers had been obstructed and manhandled, but noted that police “had received these complaints and are investigating the matter.”
The economy is controlled by a handful of big, powerful dons who have extensive business interests in all major industries. The dons supplement their income through the illicit supply of drugs, prostitutes and other contraband. They have corrupted the institutions of state through bribery and inducements, and their violent street gangs deal with anyone who dares stand in their way.
Sound familiar? Welcome to ‘Sin City’: Las Vegas in the 1960s.
The parallels between post-war Las Vegas and today’s Maldives are stark. We may not have the casinos of the Nevada desert town but we have plenty of our own vices: street gangs, people smugglers and the king of crime: Brown Sugar.
In recent weeks, it has become clear that many of our own state institutions have also been corrupted by powerful businessmen who made their illicit fortunes under Gayoom’s iron-fisted autocracy.
For ordinary folk, Gayoom’s reign often spelled poverty, misery and torture but for a cunning few, close to the dictator. Vast personal fortunes could be made through lucrative oil contracts, drug dealing and racketeering. The friends and family of the former President were effectively above the law.
Things started to go wrong for the dons, though, in 2008, when a new sheriff rode into town. President Nasheed vowed to clean up corruption and cronyism and sell off rotten state assets to private corporations, threatening the dons’ control over the economy.
The criminal king-pins are fighting back. Secret telephone recordings, aired in the media earlier this month, strongly suggest that a handful of powerful MPs, who made their fortunes under Gayoom, have woven a web of corruption around the People’s Majlis and the so-called independent Commissions in order to protect their vast personal wealth.
The police have arrested MPs Ahmed Nazim, Abdulla Yameen and Gasim Ibrahim for allegedly bribing fellow MPs, such as Kutti ‘I need some cash’ Nasheed, to vote against government bills that threaten the dons’ interests. Now the judges, who were appointed by and owe their loyalties to Gayoom, have freed the powerful MPs and barred police lawyers from court.
President Nasheed is engaged in a bitter fight to try and clean up corruption and stamp out organised crime but has few allies outside his own party.
Las Vegas’ history may, though, provide him with hope. In the 1980s, huge corporations moved into town. They bought up the mobster’s gambling dens and replaced them with glittering skyscraper mega-casinos.
The Las Vegas mafia fought tooth a nail to protect their empires – corrupting policemen, bribing judges and murdering opponents to keep the corporations out. They spun a propaganda war, warning that Las Vegas would lose its ‘soul’ if faceless companies took over.
But in the end, the corporations won. Today’s Las Vegas is hardly a testament to moral purity. But the gangsters have been forced out of town and the corruption, drug dealing and the criminal gangs have largely gone with them.
Whether the Maldives’ will win its fight against the mafia remains to be seen. The $400 million upgrade of Male’ International Airport by GMR & Malaysia Airports bodes well – not only will it boost the economy, it will also stamp out a dodgy airline fuel racket allegedly run by companies close to powerful MPs.
The future of the country, and its democracy, hangs in the balance. Will the mafia win out? Or will President Nasheed finally force them into leaving Las Vegas?
All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]
The GMR-Malaysia Airports Holdings Berhad (MAHB) consortium that recently won the controversial bid to develop Male’ International Airport will spend US$373 million on the upgrade, MAHB has reported.
Speaking at the opening of the cavernous Delhi Terminal 3 last week, GMR Manager P Sripathi told Maldivian journalists that physical work would begin on the airport towards the end of this year.
“The first phase is organising the finances and transitioning the airport from a government-run enterprise to a privately-run enterprise,” he explained.
“The transition will be a new thing [for the Maldives] and we will be there to help with that. We have done such things in other places, and we know how to go about it,” he said.
“There are over 100 various items have to be agreed and signed off between the [incumbent] Maldives Airport Company Limited (MACL) board and ourselves, but we expect to see work start on the new terminal 9-10 months from now.”
Impression of the new airport at night
Sripathi said that within six months GMR would upgrade existing facilities at Male’ International Airport “to a level that international passengers and tourists may [expect]. We will deal with the ‘pinch points’ that are there today.”
Ultimately the development will involve 45,000 square metres of new terminal, repair and expansion of the runway, parking and taxiing space, and a turning point so more flights can be landed in the space of an hour.
The infrastructure giant’s ‘brownfields’ approach – refurbishing an active airport, as opposed to a ‘greenfields’ or ‘from scratch’ project – mirrors that of its much larger airport development in Dehli. The old terminal was upgraded prior to the opening of the new one last week, which is now expected to cater to 90 percent of the airport’s passengers, with capacity of 34 million per annum upgradable to 100 million.
Sripathi acknowledged that while nothing of similar scope was going to be built in the Maldives – Male’ International Airport currently handles 800,000 passengers per annum (each way), “[Dehli] is definitely in the vein we are planning.”
Representing a company about to plow US$400 million into Hulhule, Sripathi is unsurprisingly unconcerned about rising sea levels: “Worried? Absolutely not. Land that has been there for 2500 years is not going to disappear in 25 years,” he chuckled.
Local controversy regarding privatisation and the recent political upheaval have given equally little pause to the infrastructure juggernaut – but its recent entertainment of the Maldives press pack suggest it is sensitive to domestic public opinion.
“We are not worried, because we are out of the fold. We are here to do a job,” Sripathi said.
The debate [over privatisation] has obviously been there for a long time, and is perhaps coming to an end, that we leave to [the politicians]. We are only here to do our bit.”
Accusations by opposition parties about the transparency of the bidding process were not something in which GMR saw itself involved, Sripathi said.
“Let me distinguish our role from the government’s role,” he said. “Whatever the political debate that goes on in the country, we shouldn’t be interfering – that is not our duty. That is between the executive and the [opposition]. In this particular instance, if there is opposition to privatisation then this debate has taken place over many years. Otherwise government wouldn’t have initiated this privatisation program in the first place.
Natural lighting in the new terminal building
“The World Bank IFC has [monitored] this exercise and given a very good report, and that is where this should stop,” he said.
The government’s calculations acknowledge that the strength of GMR’s bid came from its US$78 million upfront payment (compared with US$27 million from the second-highest bidder) and in particular, its 27 percent sharing of fuel revenue.
Based on GMR’s forecast, the government anticipates that 60 percent of government revenue from the airport deal will derive from fuel – $74.25 million annually between 2015-2020, increasing to US$128.7 a year from 2025-2035. This in turn was the most significant element of the final ‘net-present-value’ calculations to determine the winning bid.
The Turkish-French consortium TAV-ADPM, who expressed dissatisfaction with the bid evaluation process to newspaper Haveeru and requested a “re-evaluation of the bids”, expressed disbelief that the GMR-MAHB consortium would be able to offer such a high percentage of the fuel trade to the government “without facing any loss.” TAV-ADPM had offered 16.5 percent, warning that pushing prices higher would drive buyers away.
Sripathi claimed 27 percent was “absolutely reasonable. We have done our homework, otherwise we would not have made the bid.”
“In Male [airport] there are two types of fuel trade going on: MACL sells directly to airlines, and in another kind of sale, parties buy from MACL and then sell to airlines,” he explained. “We looked at the margins of both lines of business, kept the same percentages, and calculated what we could offer the government if we took over all this and amalgamated it under one umbrella. The margin we can give to the government? 27 percent.”
Quizzed as to whether it was reasonable to estimate a revenue share by forecasting fuel prices over the lifespan of a 25 year agreement, Sripathi replied “everybody predicts. There are international agencies that predict the way fuel prices will go up and down.”
“I’m talking about the top line,” he said. “Bottom line, if the fuel prices go up, similarly everywhere will go up and the selling prices will also go up. We have to put a margin in there.”
At its airport in Hyderabad, GMR allows five independent fuel suppliers to compete to offer the most competitive price to the airlines.
In Male, “the volume does not support that. In India there are refineries and many fuel companies operating, and fuel companies can sell directly to the airlines,” Sripathi noted. “But in the Maldives fuel is imported, and the volumes are such that not many people come and buy fuel – the model is different.”
While its fuel figures are undoubtedly one of the major reasons behind GMR’s winning bid, a simple fuel monopoly is unlikely to recoup the consortium’s US$400 million investment.
Either GMR anticipates that global growth in the fuel trade is worth the risk, or it is taking a hit on the fuel price for the sake of offering a much lower 10 percent share of gross airport revenue, as compared to the other bids (TAV-ADPM offered almost 30 percent). The only figures available to the government in estimating this revenue (a staid US$20.43 million by 2025-2035) will have derived from the existing commercial revenue from the airport.
Compared to the glittering Gucci-lined corridors of airports in tourist cities such as Dubai, Male’ International’s 4-5 meagre departure lounge shops and dilapidated eateries look positively downtown in comparison – a striking missed opportunity, given the bulging wallet of the average visitor to the Maldives.
Sripathi indicated that the consortium is very interested in the well-heeled concourse traffic – sufficiently interested for the infrastructure giant to invest a sum equal to almost half the country’s entire GDP.
“It’s a lovely project. The type of tourists coming are from the very high-end tourism market, therefore the business opportunities are plenty,” Sripathi hinted.
“I would say the airport is naturally located to advance a lot aspects, like cargo. For example, many people would be surprised to know just how much cargo goes through the airport, because of the number of international connections and wide body aircraft using the airport. People are transiting air freight through the Maldives from places like Colombo – this means there is niche value out there.”
Some investment will be recovered through a US$25 airport development tax, set by the government for all bidders to be levied only on international travellers at time of departure and added to ticket prices.
Inside the concourse
Sweetners
Many longer term “vision” projects associated with the airport seem designed to appeal to government planners. The airport will be unlocking 50 acres of land and will develop “what we envision will become the Maldives’ financial district,” Sripathi said. “That’s from our vision document. [The government] asked what can be done, and we used our expertise and experts from the US, and this is one of the things we have proposed.”
The company also runs a social responsibility foundation, GMR Varalakshmi, that funds schools and vocational training in areas where it operates. The company took the Maldivian media on a tour of its centre near Hyderabad, which included a residential technical training college running free courses for 500 young people in trades ranging from air-conditioning and electronics to IT, sewing and hotel management – often in conjunction with the group’s partners and suppliers. Guides emphasised the importance given to instilling discipline and professionalism in students, as well as technical training.
Regarding salaries and employment of existing airport staff in Male’ – a key point of contention among the opposition parties critical of the deal – Sripathi commented that the company was “not about to bring Indian standards [of employment] to Maldives – income levels and expenses are dependent on place – it is independent.”
Ground handling, currently outsourced to Island Aviation, will be taken over by the new airport company, Sripathi confirmed.
“Whether we need more than one ground handling company depends on the size of business,” he said. “If size of business allows it, then we can [involve another company], otherwise there will be single party doing it to international standard.”
For other airport staff – aside from security, immigration and air traffic control, which will continue to run by the government as per other international airports – the 1500 people currently working at the airport “will become part of the privatisation process. We are in talks MACL board members,” Sripathi said.
“We are looking at their concerns and anxieties – ultimately people think somebody is coming into the country to take over the airport. But we are here to help develop the airport’s assets and show people its full potential,” he continued.
“But what is important keep in mind is that investment in an airport is a heavy investment – US$400 million is a heavy investment. These sorts of numbers must be returned to us – and the government – otherwise we both cannot survive.”
Disclosure: Minivan News and 10 other representatives of the Maldivian media recently toured Hyderabad airport and attended the opening of Dehli Terminal 3 as guests of GMR.
Correction: A previous version of this article erroneously referred to ‘Malaysia Airlines (MAHB)’ in one instance, where it should have read ‘Malaysia Airports Holdings Berhad (MAHB)’. This has been corrected.
The current majority of members in the Maldives Majlis have been cynically irresponsible in their handling of financial legislation.
Though they have found the energy to pass detailed amendments to the Finance Act which threatens to create administrative chaos and undermine the constitutional powers of the executive, they have ignored two tax bills – the Tourism Goods and Services Tax, and the Business Profits Tax.
These two bills are a vital part of the IMF program that stabilises the economy and keeps the country from bankruptcy.
The tax bills have been buried in the ‘Whole of Majlis’ committee for around a year, and it is obvious the members are not interested in passing them.
The sensational phone recordings released this week featured Majlis member Mohamed ‘Kutti’ Nasheed reading out a plan to ‘fast process’ the Financial Act Amendments bill and no-confidence motions, and “cease all work on the tax bills submitted by the government to the Majlis”.
It is unlikely the IMF and international banking groups will tolerate this situation for much longer without a downgrading of the country’s credit rating, especially now the tax bills’ delay has become associated with high levels of corruption in the Majlis.
The IMF is not a benign charity. It is a hard-nosed organisation quite capable of taking action against countries that take its money and fail to keep their promises and obligations.
Unless a better taxation system is established in the Maldives, international bankers may pull the loan plug, and the public sector and lower income groups in the population will both experience job losses and extreme financial hardship.
The blame for this potential economic disaster will rest squarely on the Majlis members who the people elected in 2009.
The latest IMF report for Maldives criticises the high public sector wage bill that is “very high by international standards”, and the low tax rate for its tourism sector, which the IMF says “remains well below international standards”.
Maldives’ hotel tax rate is one of the world’s lowest, well behind India, Sri Lanka, Philippines, Indonesia, and other comparable tourist destinations such as Dominica, Fiji, Barbados, Mauritius, Costa Rica, Vanuatu, Bahamas, Seychelles, Tahiti, and Jamaica.
Most of the profits from the tourism sector go to wealthy men and families who are often members of the Majlis and/or owners of media companies. The dreaded word ‘tax’ is rarely heard in the political discussion programs that dominate Maldives’ radio and television. Print and internet website news organisations also avoid the subject of tax. Serious informative articles on economics and business are impossible to find.
Significant government tax revenues will undermine the present system of patronage and corruption that permeates Maldivian society. People’s loyalties would shift away from wealthy men towards the government, which will be able to provide pensions, subsidies, adequate salaries and health care. These are the foundations of a just and fair society.
The Majlis majority who are refusing to pass tax legislation are acting against the best interests of the people and threatening the independence and national security of the country.
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Three recordings of discussions between Majlis members referring to other members and officials, including a plan to cease work on the Tax bills in the Majlis, have appeared on the Internet.
The People’s Alliances party (PA) leader Abdulla Yameen Abdul Gayoom told Minivan news this afternoon that a voice in the sound clips might be his, but the conversations were ”not to borrow money to bribe MPs… [rather] As friends, we might help each other,” he said.
Yameen said the discussions ”would be a recording of a telephone call”, and were potentially taped by either the Police or by the Maldives National Defence Force (MNDF). ”We have sent a letter to the telecommunications authority to clarify whether they gave permission to record any of their telephone calls,” he said. ”It is unlawful to record private phone calls.”
However, the Police denied Yameen’s claims. ”The Police will never record anyone’s phone calls,” said sub-Inspector Ahmed Shiyam. The police had no connection with the leaked voice recordings, he said.
The People’s Alliance party secretary-general Ibrahim Shareef said that he could not say whether the voice in the clips was Yameen’s. ”Personal calls should not be recorded,” Shareef said. ”We do not have anything to say regarding this. Yameen himself will be the best person to ask. This is a personal issue.”
Jumhooree party leader MP Gasim Ibrahim did not respond to Minivan News’ calls at the time of publication.
The second recording below is between the South Kulhudufushi MP Mohamed ‘Kutti’ Nasheed and MP Gasim Ibrahim, according to ‘Kutti’ Nasheed’s personal blog. Nasheed says that the request for cash from Gasim was made months ago. In his blog, Nasheed denies that the cash had anything to do with voting in the Majlis.
Recording:1 Transcript below | Audio in Dhivehi – mp3 file
Voice1: We have the original now.
Voice2: So if we put this through the ACC [Anti-Corruption Commission] tomorrow morning, how soon will the ACC release a statement?
Voice1: It should be released tomorrow. They are coming tonight. Two ACC commissioners are in Malaysia. The President [of ACC] is here. Our friend Hoara Waheed is there. I have directly given all warnings through him… in prelude to this… that this is a must. I have also passed the number to Gasim. Seems Gasim will maintain connection.
Voice2: Have we been able to get anything from Gasim yet?
Voice1: He said Rose matter is sealed. He worked very hard. He took Rose to Paradise yesterday evening at 6. And he came to that meeting at around 9.30 -10 and said “final”. That it’s done.
Voice2: So that means?
Voice1: It’s the one million matter. Isn’t it?
Voice2: Yeah.
Voice1: He tried a funny story with me. After Friday prayers yesterday, I went to Gasim’s house…
Voice2: So Rose is joining Jumhooree Party now?
Voice1: No it’s not that… It is just for these matters…
Voice2: In that case, Nazim, why don’t we take Rose, with this million?
Voice1: Yeah. Rose knows now. And I have asked Maniku to complete the deal. With one million given there is still two million… So what happens now is… I mentioned everything that there was doubt about. I wasn’t able to talk to Gasim later. He has said everything will be Ok…100% and not to worry.
Voice2: What are you telling Maniku?
Voice1: I went to Maniku… Gasim is going to see Hassan Saeed at 2.30.
Recording:2 Transcript below | Audio in Dhivehi –mp3 file
MP ‘Kutti’ Nasheed: And again, it is three months since I have been trying to get myself out of that.
MP Gasim Ibrahim: Finishing it now.
MP ‘Kutti’ Nasheed: Are you still in the office, … mean … in the Majlis?
MP Gasim Ibrahim: I came at six o’clock and since then, now finishing and leaving now. Continuing tomorrow.
MP ‘Kutti’ Nasheed: Yeah, OK.
MP Gasim Ibrahim: What happened?
MP ‘Kutti’ Nasheed: I contacted, this is just… how is your situation in relation to flow?
MP Gasim Ibrahim: Why?
MP ‘Kutti’ Nasheed: I need some cash.
MP Gasim Ibrahim: Yeah, ok… How much?
MP ‘Kutti’ Nasheed: I need it very much.
MP Gasim Ibrahim: Have you got someone to come over here?
MP ‘Kutti’ Nasheed: Here, at this time, there’s no one.
MP Gasim Ibrahim: Yeah it is…
MP ‘Kutti’ Nasheed: Yes, tomorrow morning will be fine. It’s not a problem.
MP Gasim Ibrahim: People will see it there, will be watched, won’t it?
MP ‘Kutti’ Nasheed: OK, I will try and arrange someone from there to go to Villa, is that ok?
Voice1 (?): Dilute, Thasmeen is working to dilute… Nasheed, could you please tell that story.
MP ‘Kutti’ Nasheed: Yes, I was contacted just then…. You have seen the first draft, haven’t you?
Voice2: I haven’t seen it yet, not yet.
MP ‘Kutti’ Nasheed: OK, the first draft states specific actions that will be taken. I will, for your convenience, read it for you right now, those bits.
Voice2: OK read.
MP ‘Kutti’ Nasheed: It was agreed that to prevent the government from doing what it is trying to do, to take a number of steps all at once.
These steps include meeting with those who submitted the [airport] bids, and clearly explaining to them the common Maldivian view on this, and the view of the political parties.
The Financial Act Amendments Bill, which is in the finishing stages, is to be pushed fast through the Majlis.
Submit a no-confidence motion to the Majlis for a decision regarding the Minister for Finance Ali Hashim and the Minister for Civil Aviation Mahmood Razee who is responsible for the privatisation.
And until all these things are done, to cease all work on the tax bills submitted by the government to the Majlis.
The country’s ability to borrow money has been made more difficult by a Majlis member borrowing a large sum of money and lowering the country’s credit rating, said the state minister for finance Ahmed Assad at the President’s Office press conference yesterday. Now that person has made a request to the government to give him a ‘letter of no objection’ to borrow a further large sum, he said.
Assad refused to name the Majlis member at the conference but it is widely assumed in the Maldivian media that the Majlis member is Gasim Ibrahim.
The European Investment Bank is complaining that the country is already in default, said Assad, and because of that complaint, the Maldivian government is having difficulty borrowing money and the country is in serious financial difficulties. It is jeopardising the government’s ability to borrow money for important projects like housing, he said.
The Majlis has left a tax bill in committee for a whole year, along with around 30 other bills which the executive government has submitted, said MDP MP Eva Abdulla last night on TV Maldives’ Rajje Miadhu (Maldives Today) current affairs program. These bills were designed to provide services to the people which were promised during the presidential election, she said, and instead of doing anything to pass the bills, the opposition has been amending existing legislation to remove the powers of the president.
The IMF has set up a program to help the government out of economic crisis, and an essential part of that program is to reduce expenditure and increase revenue, Eva Abdulla explained. The Tourism Goods and Services bill and the Business Profit Tax bill are designed to increase government revenues, she said, and both bills have been sitting in the Majlis committee for over a year and no progress has been made in passing them. The Majlis sub-committee considering the two bills is chaired by the leading businessman in the country [Gasim Ibrahim], she said.
Gasim also the head of the permanent Majlis committee for economic affairs.
This week, Gasim Ibrahim and another Majlis member, People’s Alliance party leader Abdulla Yameen, were arrested on charges of treason involving bribery of Majlis members. The Criminal Court ordered that Yameen, the younger brother of former President Maumoon Gayyoom, be presented in court by the police after midnight less than 6 hours after his arrest. The High Court yesterday endorsed the Criminal Court order. Both men were released from police custody by the Criminal Court and placed under ‘house arrest’ with permission to attend Majlis sittings and committee meetings. Gasim Ibrahim’s swift hearing at the Criminal Court took place without any media presence.
Abdulla Yameen is on the permanent Majlis committee for financial affairs which is headed by his party’s deputy leader Ahmed Nazim who is the deputy speaker of the Majlis. Yameen is also head of the permanent Majlis committee for national security.
Last night on Gasim’s Villa TV station, Yameen appeared and said he was confident that he would win the 2013 Presidential election competing against current MDP President Nasheed and the DRP’s Thasmeen Ali. Yameen also criticised the government’s economic policies and said the current administration had borrowed more than US$500 million in the last 18 months.
What is clear is that both Gasim and Yameen will have to pay significant taxes if the tax laws are passed, and therefore they are delaying the bills, said Eva Abdulla on TVM last night.
Gasim Ibrahim owns resorts and has an extensive businesses and media interests. Yameen also has widespread business interests in the Maldives and was a long-serving minister during President Gayyoom’s 30 year rule.
The present Maldivian government’s ministers resigned en masse in a ceremony held at the President’s Office earlier this week, before Gasim and Yameen were arrested. The ministers, who were appointed by the president, said that they were unable to function due to restrictions placed on them by Majlis amendments to existing administrative and financial legislation.
A press release by Gasim’s Jumhooree party says the arrests were designed to intimidate its leader and Abulla Yameen, and that the resignation of the ministers, followed by the two Majlis members arrests, were contrary to ‘the spirit of the rights granted to them by the constitution’, and designed to place undue influence on the Majlis.
“We know that there are big businessmen and corruption in the country,” said the former foreign minister Dr. Ahmed Shaheed at yesterday’s President’s Office press conference. “For a young democracy, corruption is the biggest enemy. Corruption is present in every country. Democracy will only be strengthened when institutions that are supposed to fight against corruption are strengthened. Maldives is at that stage. The question we have to ask is if the current institutions don’t help us, then how can we do this?” Dr. Shaheed said.
“Maldives is in this economic crisis because corruption has been widespread. Particularly because the previous government has looted the country and because they have given priority to their personal interests rather than to the nation,” he said.
Democracy can be strengthened only when looters of the country receive appropriate punishment, Dr. Shaheed added, and the government has to take urgent action against corruption.
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