Business & Tourism – Page 87 – Minivan News

Give us your “spoonful of sugar” Nasheed urges donors

President Mohamed Nasheed implored delegates at the Maldives Partnership Forum, also known as the 2010 Donor Conference, to give the Maldives “your spoonful of sugar to help the medicine go down.”

“We’re not out of the woods yet,” Nasheed told the 60 representatives of foreign countries and financial institutions participating in this year’s conference, which aims to attract foreign investment to help the government’s decentralisation plan and aid in the economic recovery of the country.

Foreign and local delegates, government officials and media crowded the meeting room for the opening ceremony which began at 10am with a recitation from the Holy Qur’an.

A video was then played for the audience which showcased the Maldives’ transition to democracy and the hope to develop the country in a sustainable manner. Five Maldivians spoke in the video and told their stories.

They included a farmer who hopes that sustainable practices will improve his crops; a woman who wants to run her own business; a man who moved his family to Malé to provide his children with better education and is having difficulty in adjusting to the problem of adequate housing; a girl who moved to Malé for her education and fell into heroin addiction; a boy who notices how the beach on his island gets smaller and how the water comes closer to his house each year.

Speakers

Minister of Foreign Affairs Dr Ahmed Shaheed was the first to address the audience. He thanked the guests for participating in the conference, adding that “you have come to the Maldives at a crucial time” in the country’s history.

“There is a lot of work to be done to build a better future together,” Shaheed said, noting the Maldives has “transformed from a repressive society to an open society.”

“It is tempting to think that the hard work is done,” he said, “but truly, it is just beginning.”

Dr Shaheed spoke of the importance of implementing human rights and democracy in the daily lives of every Maldivian, as well as in government practices.

He also hoped that democracy would not be linked to hardship and want in the country’s memory, as he acknowledged it has been a difficult transition.

Dr Shaheed wished to “bequeath our successors a country that is…. free.” He also hoped the conference would help the government in consolidating democracy through the five key areas being addressed as part of the economic reform of the country: macro-economic stability, public reform, governance and democratisation, climate change adaptation and social development.

World Bank Country Director for Sri Lanka and the Maldives, Naoko Ishii, was second to speak. She said she felt “privileged to have witnessed your journey, your very tough journey, into democracy” and made special reference to the importance of donor cooperation.

Ishii noted that many challenges still remain for the government and the people, but assured that the conference was a positive step in finding the right international partners to “shape the future of the Maldives.”

She mentioned waste disposal as an especially worrying issue, but said “there are numerous actions being taken by the government and the donors. [They] are making every effort.”

Ishii added the “Maldives can continue to take many positive steps” and mentioned that she would have liked to sign a contract under water on behalf of the World Bank.

Next to speak was Coordinator for the UN in the Maldives, Mansoor Ali. He said “we stand at a very historic juncture. Maldives is a success story of political transition.”

He wanted to present a different side of development, saying “the other side of this island paradise remains unknown for many.”

Ali focused on human rights, violence against girls and women, and the challenges being faced by Maldivian people: food shortages, rising fuel prices, the financial downturn and rising unemployment, which he said was up to 14.4%, with youth unemployment being a high concern.

He said the conference was “an unprecedented opportunity” to address these issues and to find solutions.

“The UN system is proud to have worked with [the government] in the Strategic Action Plan…which becomes a good vehicle for the sustainable development of the Maldives.”

Ali said the Maldives needs to be assisted through a comprehensive plan and thanked the donors for their vast support to the UN and the Maldivian government.

president nasheed — President Nasheed speaking to media

Democratic progress

President Mohamed Nasheed delivered the closing speech for the ceremony, saying Maldivians “are a diverse collection of people” who are “brought together by a common goal: we all want to see a peaceful and prosperous Maldives.”

President Nasheed said despite the “considerable progress” the country has made in the last 18 months, “there is so much work to do” since the country is still in “the infancy of democracy.”

He spoke of the transition to democracy and the issues that still need to be addressed to assure equal rights to every Maldivian.

“I don’t make a secret of my concern over the capacity of the judiciary to expend justice. Nevertheless, we respect their independence and hope that…it will grow to be a respected institution.”

He spoke of freedom of the press, noting that although the press could now “report and comment as they see fit,” he urged “certain sections of the media to be more responsible.”

He said journalists should be mindful of the consequences of their actions, and asked journalists “to try to the best of their ability to report the truth.”

He noted that the Maldives had climbed 53 places in the Reporters Without Borders’ Press Freedom Index, and warned that the government would take action against anyone who tried to undermine press freedom.

President Nasheed said “Maldivians enjoy more freedom today than at any other point in history,” and added that the government believes “people need liberty to progress.”

The president spoke of civil servants and the need to cut down on government expenditure, saying he is working with the international community “to assure we don’t spend more than we can afford.”

Politics

President Nasheed said according to the World Bank, the Maldives was facing the worst economic situation of all countries going through a democratic transition, attributing this to the fact that “we inherited an economy in crisis. We inherited a huge national debt and millions of dollars of unpaid bills.”

He said the way it worked in the past was “when international diplomats and observers come to this country, we try to patch everything up and try our best to show a clear, clean picture. But I think otherwise.”

The president said he wanted to show the donors “the worst of what we have” to give them a clear view of the situation the country is in.

“There are a lot of people who do not like the things that we are doing. But most members of the opposition are sensible and respectable politicians.”

But he criticised some members of the Dhivehi Rayyithunge Party (DRP) who this weekend were “doing their best to get arrested” and disrupt the donor conference, saying that in his mind, “violence only creates violence.”

He said he did not believe arresting DRP leaders was the solution to the recent political unrest, or to past violations of rights, adding “if we took everyone implicated in corruption and torture, we would end up arresting most of the opposition.”

“It’s time that certain politicians left the nursery and learn to grow up.”

Leader of the opposition DRP Ahmed Thasmeen Ali meanwhile wrote an open letter to delegates of the donor conference claiming that under Nasheed’s leadership, the Maldives was “sliding into political chaos and instability”.

“It is my humble request that you may please exercise the powers of your good offices to address the issues of democratic deficit in the current administration,” Thasmeen wrote. “Counsel against the efforts of the government to consolidate absolute power in their hands, and advocate for the discontinuation of their endeavors to eliminate an effective political opposition.

Climate change

As a major platform of his campaign and presidency, President Nasheed spoke to the participants of the conference on the reality of climate change and the need to take action.

“Climate change is real,” he said, “and time is of the essence and it seems we are falling behind. The world needs to go carbon neutral by mid century.”

President Nasheed said his government wants “to break the link between carbon and development,” noting that “carbon neutral development is not just possible but profitable.”

The president said donors were investing in the Maldives, despite the challenges of climate change and highly-publicised threat of submersion, “because they want to maintain, adapt, protect and uplift the country. If you want to protect something… then of course you will come and donate and you will help.”

“This is a crucial period in time. We can actually introduce adaptation and litigation measures quickly enough to save the Maldives, so I think that’s why the donors are investing,” Nasheed said.

Donor Conference

President Nasheed thanked the donors for their participation, saying it is “so important and deeply appreciated.”

He said that thanks to the transition to democracy, “I believe the Maldives is becoming a better and fairer place,” and added that “with your assistance, we can help ensure the long term survival of this country and this land.”

World Bank aid

After the opening ceremony, Minister of Finance Ali Hashim and Naoko Ishii signed an agreement, on behalf of the Maldivian government and the World bank respectively, for an additional US$13.7 million in aid.

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Malaysia Airlines withdraws lawsuit following out-of-court settlement

Malaysia Airlines has withdrawn a long-running US$35.5 million lawsuit against Air Maldives in the Malaysian High Court, after the Maldivian government withdrew a US$90 million counter-claim in the Singapore International Arbitration Centre.

Malaysia’s national news agency Bernama reported that an out-of-court settlement had been reached between the two parties after discussions on 14 February. The Maldivian cabinet held a meeting to discuss such a settlement in late December.

According to Bernama, the agreement was reached after “intense negotiations” between Malaysian Airline Systems (MAS) executives Dr Mohd Amin Khan (General Manager of Network and Revenue) and Dr Wafi Nazrin Abdul Hamid (General Manager of Corporate and Legal Services), and State Finance Minister Ahmed Assad and Attorney General Husnu Suood representing the Maldives.

Last week Suood told parliament that the Air Maldives case presented “legal challenges” and there was little documentation in favour of Air Maldives.

Neither Assad nor Suood were responding to enquiries at time of press.

Failed airline

Air Maldives went international in 1994 in a joint venture between Maldivian government and Naluri (then Malaysian Helicopter Services Berhad), a holding company owned by the chairman of Malaysia Airlines, Tan Sri Tajudin Ramli.

Naluri paid $8 million for a 49 per cent stake in the national carrier, according to a report by Alkman Granitsas in the Far Eastern Economic Review. The plan was to run short-haul flights connecting the Maldives to major regional hubs, including Colombo, Trivandrum and Kuala Lumpur.

But despite a burgeoning tourism industry the airline met an inglorious fate in 2000, spiralling into bankruptcy amid ambitious expansion into long-haul routes and allegations of mismanagement under the directorship of Anbaree Abdul Satter, also the controversial head of the National Security Service (NSS).

Initally a short-haul carrier, the airline leased three aircraft and started running long-haul routes, including Gatwick, and quickly found itself facing losses somewhere between US$50 to US$70 million. Granitsas noted at the time that the airline’s collapse in April 2000 met with little comment from the Maldives government or media, and suggested that the resultant plunge in business confidence led to a run on the rufiyaa and a dollar shortage that crippled the economy.

He quoted Husnu Suood, then a lawyer representing Airbus, as saying “the current economic crisis can be party attributed to the collapse of Air Maldives.”

A former member of the Air Maldives cabin crew told Minivan News that news of the company’s collapse was dropped “very suddenly”.

“I was on board the last flight between Male’ and Dubai when we were told,” she said. “We landed in Dubai at 8:30pm carrying a load of Hajj pilgrims from Colombo, and somebody came on board to tell us to stop any flights. We were flown back [to Male’] and two sets of crew in Dubai were recalled.”

She added that while there had been rumours that the company was facing financial difficulty, “we’d started picking up really full flights to London Gatwick and were already planning the roster for Charles de Gaulle in Paris and Johannesburg South Africa.”

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Government debt reaches $553 million, a third of GDP

President Mohamed Nasheed has highlighted the financial problems the government is facing, mainly foreign debt and a gaping budget deficit.

In his speech President Nasheed reminded the Majlis of his address last year, when he said his “administration was prepared to provide equitable services to all citizens and to be accountable for the people.”

The president noted his administration had made “satisfactory progress in these endeavours,” but also mentioned some startling figures regarding budget deficit and debt.

In 2009 the government’s debt to foreign financial agencies and banks stood at US$553.8 million (Rf7 billion), which amounted to 37.6% of the country’s GDP. The government’s total expenditure for the same year was US$617.2 million (Rf7.9 billion).

The estimated government expenditure for 2010 is of US$648.4 million (Rf8.3 billion). The People’s Majlis approved a total of US$710.9 million (Rf9.1 billion) to be allocated for government spending.

The estimated revenue for 2010 is of US$781.2 million (Rf10 billion) and the estimated deficit for this year is of US$429.7 million (Rf5.5 billion).

Mr Rodrigo Cubero, IMF mission chief for Maldives, said in a press release issued in January 2010: “The Maldivian economy continues to face serious challenges. In particular, addressing the very large fiscal deficit is of paramount importance to secure a stable economy, equitable growth, and lasting poverty reduction.”

The government has said it plans to minimise the deficit by reducing government expenditure, including by cutting down the number of public servants and decentralising several government agencies. Both measures have encountered heavy opposition.

On this subject, President Nasheed said “the government will continue to make every possible effort to bring about a positive change to the salaries of civil servants and government employees.”

The government will also “include processes to increase revenues of the state.” This includes the proposed taxation bills—the bill on administration of taxation, the bill on business profit tax, and a newly submitted bill on taxing from sales of tourism service providers.

The president said he was “confident that this Majlis will work to ensure that these…bills are passed as soon as possible.”

Permanent Secretary for the Finance Ministry Ismail Shafeeq explained that most of the debt was owed to “loans from foreign institutions, banks and other agencies” as well as foreign and domestic borrowings, most of which are being used in the economic development of the Maldives.

“The loans will take a long time to pay back, some of them are for 40 years,” said Shafeeq, but added that the government is making the payments on time.

“The deficit is a problem. It means a shortage – the government has spent so much.”

The Ministry of Foreign Affairs, in partnership with the UNDP, will be hosting the IV Maldives Partnership Forum, also known as the Donor’s Conference, later this month. The forum seeks to find foreign investment for their development plans, which would help significantly in lowering government expenditure.

“Reducing expenditure and restricting unnecessary spending” are key to solving the country’s financial debt, according to Shafeeq.

The government is also following recommendations from the IMF and ADB, both of whom have given out significant loans to the government for the economic development program.

In a press release produced by the IMF in December 2009 Deputy Managing Director and Acting Chair of the IMF, Mr Takakoshi Kato, said:

“The authorities’ program, while subject to considerable risks, is strong, comprehensive, and well-focused, and deserves strong support of the international community. If fully implemented, it will put the Maldivian economy back on a path of macroeconomic stability and set the conditions for sustained economic growth and poverty reduction.”

President Nasheed said in his speech that “the government has embraced the advice of international financial agencies and begun the implementation of some of the measures suggested by these agencies. We have started enjoying the benefits of these measures.”

The IMF allocated a loan of US$92.5 million last December to go towards the economic recovery program.

The ADB has assisted with two loans, one of US$\1.5 million and one of US$3 million. Both are to go towards the economic recovery programme.

The Ministry of Finance could not provide Minivan News with the estimated debt for 2010 at time of publication.

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Staff disgruntled as MTCC closes Feydhoo office

The Maldives Transport and Contracting Company (MTCC) closed the company’s Addu Mulaku regional office in Seenu Feydhoo, leaving many employees redundant.

MTCC closed the office after the government handed over ferry services for the region to MVK Maldives Pvt Ltd, which commenced services from 1 January.

But many employees from the Feydhoo office feel their terminations have been handled unfairly, holding a demonstration and refusing to allow MTCC to take assets from the office.

An employee who did not wished to be named said “We did not want them to take any of the things back to Male’ until our full salaries and compensation has been paid.

“However, it’s a private party that’s transporting the goods back to Male’ so we don’t want to cause any more trouble. They have already loaded everything onto a boat, and there isn’t much we can do to stop it.”

Many employees said an MTCC official from Male’ had met them at the end of last year and promised a three month termination notice.

“He said we would get three months, as well as holiday and medical pay, but a week after he left we received one month’s notice,” the employee said.

“We have a written document, but it doesn’t have the MTCC stamp on it so we can’t use it in court.”

The staffed also claimed they had received a much smaller amount than that promised.

Another staff member who was made redundant said “how can I describe how I’m feeling? I have a family to look after. It’s very difficult now.”

A disgruntled employee said he had been forced to beg around the island.

“I am doing odd jobs here and there – it’s very hard to find work these days,” he said.

Ahmed Zareef, the manager of the Feydhoo office, said that the MTCC manager who promised three months’ notice hadn’t given anything official, “It was just his word.”

“The notice said employees should receive Rf3000 (US$233) but many have recieved Rf1900 (US$147). It’s a big loss for these men, they have families to take care of.”

Asked what would happen to him, Zareef replied “I will lose my job as well. I was offered an MTCC job in Male’, but how can I live in Male’ on a basic salary when the living expenses are so high there?”

MTCC response

Ahmed Zaki, another MTCC manager, said that the company follows employment regulations set by the government.

“The employment regulations state that all employees who have been with the company between one to five years will get a one month notice,” he said.

“The stories of an official from Male’ saying three months are hard to believe. He would not have said that.”

“All employees were given opportunities in MTCC in other regions,” Zaki added.

“We have also been talking to the employees for a few months prior to the termination notices, telling them about the possibility of the Feydhoo office closing.”

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New work visa regulations frustrating business

Picture-perfect hotels and superb service are synonymous with Maldives tourism.

However the country’s number one industry has always grappled with a shortage of skilled workers.

To counter this dozens of skilled foreign workers enter the Maldives each year, so the recent change in procedures and requirements for work visas has thrown the industry into disarray.

“What we didn’t need was to re-invent the wheel,” says Ibrahim ‘Sim’ Mohamed, secretary general of the Maldivian Tourism Industry (MATI).

“Every day it becomes more difficult to operate tourism related businesses because of the changes in requirements and procedures for work permits,” Sim said.

The Honorary consul of Italy, Giorgia Marazzi, echoes a similar thought.

“The procedures are long and confusing now, and even 50 year old tourism professionals are obliged to show certificates,” he says.

Problematic Procedures

Regulations surrounding work visas were recently changed. A deposit [to cover the worker’s return airfare] is paid to the Department of Immigration and Emigration, while the Ministry of Human resources issues an employment approval form. This must be translated into a work visa by the Department of Immigration.

“The sudden change, coupled with the fact that requirements are so high and stringent now, makes it difficult to comply with [the regulation] in some cases,” says Sim.

MATI members have complained about the issue in numerous meetings and forums, saying they need full time staff just to complete the paperwork and queue at the relevant ministries.

Among the problems identified is the lack of information sharing between relevant ministries.

Giorgia recounts the case of an Italian businessman who came to town and registered a company related to tourism and diving. He registered the logo and opened a bank account only to be refused a work permit.

“If you are promoting investment you have to enable a person to work legally in the country,” Giorgia said.

“Ministries should cooperate and have a comprehensive network of information and not work against each other.”

According to Mohamed Anees, HR manager of Sunhotels, “even if the deposit was paid at the HR ministry before the change in procedure, when you go to the Department of Immigration with the paper work you might be asked to pay the deposit again.”

An exasperated Sim accuses the different departments of “fighting for territory. Controller of Immigration Ilyas Hussain begs to differ.

‘It’s a misunderstanding on their part to think like that. There is no turf war, and we just give out work visas once the employment approval form is given by the HR ministry, and then people can work here legally.”

He adds the rise in deposit money is also to provide a few days’ accommodation in case a person has to be sent back.

“As immigration controller we need some sort of guarantee, and we need to see certificates to issue work visas. We deal with the money now, while HR deals with administrative issues.”

He says tourism industry should instead worry about paying bed taxes and other money owed to the government on time.

The need to show educational and trade certificates is a particularly contentious issue.

“It has to be attested, but lawyers and consulates attest it without even verifying the origin [of the certificates],” says Giorgia.

Anees agrees that the procedures are difficult and a necessary evil: “We bring foreigners as we can’t find skilled people here, so it makes sense to ask for certificates, and sometimes they reject the papers saying they’re not up to the mark.”

But he finds the amount taken as deposit money too high.

“It should be at maximum the amount of a return ticket to the country of origin, but now they are asking for much more.”

Anees also has problems with the HR ministry’s quota system for hiring foreign employees. At present the HR ministry dictates how many foreign workers a particular company can hire. The ministry also decides which jobs foreign employees can hold and the number of foreigners who can be employed in a particular job category.

“Sometimes we have to change job positions as per requirements, and then we are obliged to go through the whole process of advertising and all that.”

Instead, he reasons, a quota should be given and left up to the resort to fill as required.

Both Giorgia and Anees also feel that scrapping the requirement of a police report is a mistake: “You don’t know what shady people might turn up in the Maldives then.”

Shortage of skilled personnel

At the heart of the matter is a lack of skilled Maldivians.

“It is costly to bring in foreigners, but to train Maldivians takes money and man-hours, so some opt for the faster and easier option,” reasons Sim.

A businessman, who asked not to be named, working in the tourism sector says, he advertised for 20 job positions recently ranging from laborers to manager positions and got only one applicant, who was a foreigner: “in the Maldives there is no unemployment – it’s all voluntary [unemployment].”

According to statistics from the tourism industry, out of the 54 resorts in the study 27 were unable to attain the 50% Maldivian staff requirement. It was interesting to note that its was mostly resorts with foreign management that had the highest number of Maldivian employees.

“It is a colossal failure on the part of past and present governments that they hadn’t addressed this human resource issue,” Sim says.

He points out that Maldives gets more arrivals, there are more resorts opening up and resorts are of a higher standard, “yet the country lacks manpower.”

Societal attitudes also play a role: only white collar jobs are sought after by Maldivians.

“We have failed to imbibe in our youth the notion that work is dignified no matter what you do,” says Sim.

The education system is also not geared towards producing people for the main industries of Maldives, like tourism, fishing and construction, he complains.

The policy of running vocational training parallel to the education system the last 12 years has not paid off, he says, and every now and then parliamentarians whip up the issue to garner publicity and sympathy instead of working towards finding a permanent solution to the problem.

“We expected the new ministers to be more open and liberal minded, and instead things have gotten worse,” Sim says.

Deputy HR minister Hussain Ismail agrees procedures are now more restrictive.

“Before it was as businessmen wanted,” he says, adding enough forewarning was given before the implementation of new procedures.

“The different departments do share information, but of course there are hitches which we are trying to smooth out.”

As for the problem of certificates, Hussain says the ministry is now even accepting trade certificates.

“If a person does not have educational qualifications, he should be able to produce a trade one from wherever he has worked. After all he is being hired for his skills.”

The lack of skilled Maldivians doesn’t wash with him, and he takes as an example the case of a seaplane company.

“The company advertises for pilots, and in addition to the pilot license they also ask for four credit passes in London ‘O’ levels.”

He says despite the fact that there are now lots of Maldivian pilots, they are not hired due to the criteria of having specific number of ‘O’ level passes.

“If companies are willing to train foreigners why not train Maldivians?” he asks.

Hussain says the authorities will not ease work visa requirements just to make it easy for business.

“We have to look into social issues also and take them into consideration,” he argues.

However tightening the work visa procedures without solving the underlying issues might make “the tourism industry grind to a halt very soon,” Sim warns.

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Maldives to ease trade barriers with India

The government will ease trade barriers with India to promote trade between the two countries and accelerate foreign investment. Foreign Minister Ahmed Shaheed is currently leading a delegation in India to facilitate trade.

Indian financial newspaper Business Standard claimed Indian companies, including Tata, Suzlon, GMR, Apollo Hospitals and Oberoi, could invest as much as US$1 billion in the Maldives and significantly boost the country’s economy.

The Standard also reported that the Maldives foreign ministry will increase the leasing periods for resort development to 50 years and reduce the base rent in a bid to promote foreign investment in the hospitality sector.

Ahmed Naseem, state minister for foreign affairs said “many items that are traded between countries in the South Asian Association for Regional Cooperation (SAARC) will have tariffs eased on them, and this will make trade between the countries easier.”

Indian High Commissioner to the Maldives, Dnyaneshwar Mulay, said such a move would benefit the Maldivian economy.

“The lower tariffs will make exports and imports cheaper and make the market more competitive,” he said, adding that such a deal would also encourage the Maldives to increase its own exports.

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Apollo Hospital Group to run IGMH in privatisation deal

The ministry of health and family has announced a 15 year agreement with Apollo Hospital Group to manage Indira Gandhi Memorial Hospital (IGMH) in Male’.

The deal was signed on behalf of the government by Health Minister Dr Aminath Jameel and Dr Preetha Reddy, who represented Apollo Hospital Group.

Apollo estimates it will need to spend US$25 million to bring the hospital up to global standards, according to the Economic Times, an Indian newspaper.

A statement released by the ministry claimed the objective of the deal is to improve health services while keeping prices stable.

Apollo Hospital Group was first established in 1983, and is now considered the third largest private healthcare provider in the world. The company currently administrates 8,000 beds and has plans to reach 15,000 beds, reports the Economic Times.

Apollo is expected to make an assessment of the hospital’s needs in the first three months, and plans to offer orthopedics, cardiology, gastro, neurology and acute care and trauma specialities in the first phase of the privatisation deal. The hospital will set up and operate a cardiology unit within the year, the health ministry added.

Chairman of the privatisation committee Mahmood Razee said one of the first changes to be made by Apollo would be to management.

“The major issue was that the management structure [at IGMH] was not working properly, this led to high costs and some services and medicines not being available. The overall qaulity of service went down,” he said.

“Over the next three months there will be structural changes to management changes at IGMH, and an evaluation plan will be submitted as well. Apollo group gives IGMH the advantage of economies of scale, which will lower the overall running costs.”

The hospital’s new management group has also revealed its intentions to make 80% of its employees Maldivian over a 15 year period, although it was unclear as to how this would be achieved given the lack of medical higher education facilities in the country.

Another objective the ministry noted was to ensure that all employees are treated within the correct employment regulations set by the government.

Razee noted that the deal was not part of the government’s public-private partnership scheme.

A doctor working at IGMH said staff were unable to comment on the deal “because we haven’t been officially informed yet. All the information we have received has come through the media.”

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Govenment sells 20 percent of MWSC to Hitachi at same price

The ministry of finance has sold 20 percent of the Maldives Water and Sanitation Company (MWSC) to Japanese company Hitachi Plant Technology.

The deal was signed by Minister of Finance Ali Hashim and President of the Hitachi Company Masaharu Suvikawa in Male’ yesterday.

According to Fathmath Muaza, assistant director of the ministry of finance, the total sale was worth US$16 million, with 53400 shares sold at US$ 305.90 per share – the same price the government last bought them for.

Asked why the government has decided to sell part of a profitable business, Muaza said “At the end of 2008, the government had to buy back the shares it had with the Danish company [HOH Water Technology of Denmark] as per the [existing] joint venture agreement. All these years that company in Denmark held 24 per cent of the shares in MWSC.”

Mifzal Ahmed, investment advisor to the ministry of economic development, said Hitachi’s decision to purchase shares in MWSC shows that the foreign investment community regards the Maldives “as a very sound place to do business.”

” It also shows that large companies are interested in engaging with local companies to introduce new technologies, particularly environmentally friendly technologies, that will make a strong contribution to our goal of carbon neutrality by 2020,” Mifzal said.

“We are also confident that these technologies will result in a better quality of service to the people of the country at the most affordable price possible.”

Opposition

The government has previously come under fire for its privatisation plans.

In 2009, it was accused by the opposition DRP of using funds to the tune of US$20 million, allocated for tsunami relief on Meemu Kolhufushi and Thaa Madifushi, for purchasing the MWSC shares back from the Danish company.

DRP spokesman Ibrahim Shareef said “I don’t think this is a good idea at all, this money should have been used for the tsunami relief effort. Under the joint venture agreement, there is a buy back option for the Danish company, we didn’t have to buy back all the shares.”

Shareef said he thought the biggest problem with the deal was that all the shares were sold at the same price that the government bought them for.

“If they sold it at a premium it might have been a different story, and there wasn’t even an initial public offering.”

Transparency

Dr Mohamed Jameel Ahmed of the Dhivehi Qaumee Party, DQP, said he felt the deal was not transparent enough, had no regards for the impending privatisation bill, and questioned why the company was not open for public purchase.

“I don’t see the necessity of selling 20 per cent of a profitable company for US$16 million.”

Jameel said the deal seemed rushed and due to the lack of transparency, said he held a “strong suspicion [that there were] underhand deals”.

In addition, he said, “why was the deal rushed in a recessionary period as we would have got a better price if we had waited a few months?”

In response to these accusations, Mohamed Zuhair, the president’s press secretary, said “DQP is obviously an opposition party and they would refute governtment policy. We deny all allegations that the process is not transparent.”

Zuhair siad that the whole process was monitored through the privatisation committee, public private partnership, Invest Maldives and the ministry of finance.

Previously, the government sold seven percent of its shares in Dhiraagu to Cable and Wireess for US$ 40 million, a deal which was heavily criticised as many felt the deal was largely under valued.

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The rise and fall of the Maldivian shipping fleet

Maldivians and the ocean have always gone hand-in-hand. Maldivians have always been good seamen, and the country’s sea-going culture has always been strong.

During President Nasir’s rule, Maldives Shipping Limited (MSL) was one of the region’s leading shipping companies.

Under the leadership of Ali Umar Maniku and the late Ali Hussein Didi, the company prospered as the flag carrier of the Maldives.

During the 50s and 60s, the MSL had a fleet of almost 60 ships. Many of these were ancient vessels, but due to the hard work of their crews were kept running at very high standards.

“There wasn’t a day when a port in Colombo, Bombay, Karachi, the Gulf or the Red sea had at least five MSL ships,” says a shipping analyst and former captain of a MSL vessel.

“All MSL ships in those days had the red white and green colours of the Maldivian flag painted as stripes onto the funnel; it was a very prestigious company.”

Maldivian seamen were recognised and sought after by international companies for their work ethic, despite being paid very basic salaries.

The MSL fleet was maintained due to the hard work of the many seamen – their diligence kept the ageing ships in excellent condition: “There wasn’t a moment when they wouldn’t be painting a hull.”

These were the glory days of the Maldivian shipping industry. Ships were running profitably and making a huge contribution to the Maldivian economy.

Fall of a fleet

However during the 80s, MSL ran into hardship. Most of the fleet consisted of bulk carriers, while container ships were fast becoming the preferred vessel for many shipping companies.

MSL was unable to keep up with the fast moving modern shipping industry, and its ageing vessels had finally reached their last port.

Many blame the fall of the MSL on the government at the time, for not investing enough in such a vital sector.

In a recent interview with Dhi FM, former President Maumoon Abdul Gayoom said “When I became president, the shipping that existed had started to decline… in the reign of the president before me, during Ibrahim Nasir’s time, vessels that were shipwrecked were salvaged and repaired for use. Then very old boats, as old as 20 or 25 years, were bought to create the shipping line.”

“What came next was the change to container shipping. We didn’t have [it] at the time. When it changed to container shipping, we had to find bigger boats that could fit containers. We didn’t have the capacity for it.”

However, many other parties believe this isn’t the case.

The shipping analyst told Minivan News that “If private parties could succeed in the shipping industry, I don’t see any reason why the flag carrier of the nation couldn’t succeed. The fleet was outdated, and the focus was not on the number of ships anymore, rather the total tonnage.”

Mismanagement?

Many people believe that the fall of the MSL was due to mismanagement and negligence.

In the 80’s, all vessels of the MSL were under the same company name, and all were under one insurance company.

In 1983, this particular insurance company went bankrupt and many MSL ships began to be impounded at ports.

This happened whenever an insurance claim was made against them – even if a ship did not have a claim against them, all sailed under the same company and were stopped for being a sister ship.

This most probably led to the fall of MSL.

What followed was an attempt to modernise the fleet. All the ships were renamed and each sailed under a different company.

MSL was renamed Maldives National Shipping Management Limited, MNSML, and the fleet size decreased. The size of the ships did begin to increase, but these ships were mostly still bulk carriers even though container shipping was becoming popular.

Today MNSML is known as MNSL, and opereates a modest fleet of three ships. The potential for growth is still there, as the Maldives still lies in the middle of a popular shipping route.

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