Day: April 14, 2010

Bill banning import of alcohol presented to parliament

A bill banning the importing of alcohol and pork into the Maldives has been presented to the parliament.

The bill was presented by Independent MP Ibrahim Muthalib, which he said amended the list of things that could not be imported to the country under 75/4 of the law on concerning contraband.

”The last time I presented a bill  banning that sale and usage of alcohol on inhabited islands they sent it off the floor claiming that it only bans particular places or areas (inhabited islands),” he said. ”This time I am presenting a bill to ban [alcohol and pork] from being brought inside the country at all.”

He said he hoped that all the MPs would make “a good decision” on the bill after thinking “with a good mind.”

DRP MP Ahmed Rasheed said that he would not support the bill.

”By removing my arms in case I hit someone, by cutting out my tongue in case I talk filth, by blinding my eyes in case I see something that ought not to be watched, by plugging my ears in case I hear something I ought not – I can’t be a Muslim that way,” he said. ”I don’t think there is anyone with so weak a faith.”

People’s Alliances party MP Abdul Azeez Jamal Abu Bakuru said that he “fully supported” the bill.

”I have information that in 1972 alcohol was not imported to the country,” Jamal said. ”It is not a good way to think that its best to be surrounded by sins and not to commit. [For example] it is said to stay away from sex before marriage, and to wait patiently without doing it.”

PA leader and MP Abdulla Yameen said that although the Maldives was a hundred per-cent Muslim country importing alcohol could not be fully banned.

”Look at Jeddah (a Saudi Arabian city on the shores of the Red Sea). It is a city in an Arab Islamic country but you can get alcohol from there,” Yameen said.

Maldivian Democratic Party (MDP) Parliamentary group leader Moosa Manik claimed he would not support the bill as it was “politically motivated”.

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Government’s bill reduces tourism revenue “but improves investor confidence”

The government has proposed an amendment to the Tourism Act that reduces the rent resorts pay as well as extending the lease period to fifty years, a move which would significantly reduce the government’s income from the tourism industry in the short term.

The bill was proposed by MDP MP Ibrahim Mohamed Solih, who said the main aim of the bill “is to improve investor confidence and performance of the tourism sector.”

Solih said rent would be charged depending on the resort’s area and not number of beds. Resorts are now to pay US$7 for each square metre.

Resorts would also be categorised according to their size; the smallest group being from 100,000-200,000 m²; the second from 200.000-400,000 m², and the largest is above 400,000 m².

Solih said this will ease the burden on resort owners and will help resorts currently under construction around the country.

He noted that this would reduce the government’s income from the tourism sector from Rf 1900 million (US$148 million) to about Rf 1300 million (US$101 million).

Creating an investor-friendly environment

Minister of Tourism, Arts and Culture, Dr Ali Sawad, said the amendments to the Tourism Act will create more macro-economic opportunities in the Maldives.

“It is geared towards achieving three objectives: the first is transforming leases to land rent. The second is phasing out the bed tax, and the third is increasing the lease from a minimum of 35 years to a minimum of 50 years.”

Resorts currently pay a flat rate of US$8 per occupied room, per night, known as the ‘bed tax’, however the resort industry has criticised this as a disincentive to increase capacity and promote expansion, and limited potential revenues in the future.

Dr Sawad said since all the revenue streams are linked, any amendments to the bill will have a “ripple effect on the economy” and would create an environment for greater investments as investment costs are decreased.

He assured that the amendments would bring in more revenue starting from next year, but admitted the government would see “a slight drop [of revenue] during the transition. It’s all part of a larger fiscal policy.”

The amendments to the bill would ultimately “not lower revenue” from the tourism industry, as they were intended to make investment in the Maldives “more attractive.”

Former Minister of Tourism Abdulla Mausoom said “we definitely have to create a positive investment environment in the country,” because in the last year and a half, “investor confidence has been down.”

He said the outcome of both the tourism bill and the taxation bill “are not certain.”

“The Maldives is very small and our natural resources are limited,” Mausoon said. “The government has a responsibility to look after our resources.”

He said he believed “it is not in the best interest of the country” when an investor is willing to pay a better price and the government had set a lower fixed price.

“We should facilitate and investor-friendly environment without eliminating the competitiveness of the market,” he said.

Mausoon suggested the government set a minimum fixed rate and have bidders propose higher bids from there. He said most of islands desired by resorts were what he termed, “micro-islands” or those less than 10 hectares in size (less than 0.1 km²).

“The government has a responsibility to safeguard our assets,” Mausoon said, noting that if investors are willing to pay more, “they should be allowed to pay more.”

‘Sim’ Mohamed Ibrahim from the Maldives Association of Tourism Industry (MATI) said “we think this a very forward-thinking bill. Obviously there are little tweaks needed, but overall it’s a good bill that has come at the right time.”

Sim said “the government has worked closely with the tourism industry to develop this bill” and had consulted with the industry “at every stage.”

Bed tax and island lease vs. GST and land rent

Currently, the cost a resort pays the government is based on the number of beds it has. Dr Sawad said on average, the government was 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.

He said a “conservative estimate” of how much revenue the government’s proposed Goods and Services Tax (GST) is expected to bring in was over US$60 million a year. He noted that the tax revenue would continue to increase as the tax net widens.

Dr Sawad said the bed tax would be phased out in the next three years when the GST is in place.

He also said the leases for resorts currently brought in around US$78 million, while the land rent should collect about US$60 million a year.

“By addressing the lease rent head on, we will be able to reduce investment costs, which makes for a more attractive investment,” he said.

However Mausoom said the land rent increases the uncertainty for the tourism industry, because there is no guarantee as to how many beds will be developed on then land: “A resort owner can build as many rooms as possible.”

“This US$7 per square metre is very misleading,” he added, noting that “the government will only be getting three set rents: US$1 million [per month] for the islands in the smallest bracket. For the middle bracket it will be US$1.5 million, and US$2 million for the larger islands. It doesn’t make sense.”

He pointed out the smallest bracket—those islands smaller than 200,000 m²—“should catch at least US$1.4 million, if you multiply it by US$7 per square metre. It’s totally misleading.”

Another thing he believes is unfair is the government’s decision to wait until the GST is in place before ratifying the Tourism Act. “They can’t put a condition like that,” he said, “it’s putting an extra burden on resort owners.”

Mausoom also said he believed there were “many discrepancies” in how the MDP is trying to consolidate the different bills and acts concerning fiscal policy, and said “the government has to start singing the same song. A song that is nice to the Maldivian people, nice to the investors, and nice to the tourists.

Sim explained that the amount the government will lose in land rent (compared to the current lease and bed tax scheme) would be offset by the GST levy, “which would go hand-in-hand with this bill.”

He said adding the business profit tax, GST and land rent, the resorts will “probably pay more than they do currently alongside existing government revenues from customs duties.”

He added that the three year waiting period to phase out the bed tax “is a bit long and [we] will try to lobby for one year.”

Sim also noted that the major issue with the Maldives’ tourism industry is capacity: “The industry can only grow through an increase in capacity. The current situation is good for people who have established, successful properties, [but not for new investors].”

The new system, he said, would offer businesses “certainties” and reduce the current level of “maneuvering” occurring within the industry.

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Government is still “one man show”, says Vice President Dr Waheed

When Vice President Dr Mohamed Waheed appeared as the first-ever guest on VTV’s new show Hoonu Gondi (Hot Seat) on 12 April, he took the opportunity to say he was “not completely satisfied” with his job.

The aftermath of the Vice President’s interview has brought his comments to television shows, newspapers and blogs, with headlines exploiting his words as criticisms directed to President Mohamed Nasheed and his leadership.

Speaking to Minivan News, Dr Waheed said although he usually does not do interviews, but in a small community like Malé “people know when someone is not happy” and he felt he needed to speak out.

“I made a fairly measured response [to the question], careful not to be too critical of the government,” Dr Waheed said. “It is time to get rid of that fear of speaking out.”

He said people had been waiting for him to say something about his role as the country’s first elected vice president, and felt he needed to express “what is good, and what is not working” in the current government.

“This is also my government. Clearly there are ways it could be stronger,” he said.

Dr Waheed said he felt the government should be “shaped in the spirit of democracy and good governance,” adding that “we still have a lot to learn.”

He said he held the responsibility to tell the people who elected him how he felt about the government, their over-all performance and his role in it. “It’s my responsibility to express my feelings,” he said, “I think people in power should express themselves.”

Dr Waheed’s feelings were that the “way we function in [this] government is not too different to what it used to be. It’s still one man running the show,” he said, but assured he was “not picking issues” with the government, but “talking about democratic process.”

One of the main reasons for his dissatisfaction was that he doesn’t feel he is sufficiently involved in the decision-making process. “I don’t feel I am able to contribute, that consultation is not there.”

He said that while it was the president’s privilege not to consult him on everything, he thought the core of a democratic government should be “more inclusive and participative.”

“The people of the Maldives didn’t elect me to sleep for five years. I believe I am part of the leadership of this country and it is necessary for me to be involved,” Dr Waheed said. He added “the government will be stronger if the president consults with us.”

He also expressed concern over the fact that the current government won the 2008 elections on a coalition-party platform, but is now being run by a single party, the Maldivian Democratic Party (MDP).

However Dr Waheed said this was “nothing that can’t be fixed”, as the government “is going through a learning process.”

He also believes the government is doing a good job in delivering their promises to the people.

“For any government, the first few months have to go into planning,” Dr Waheed said. “There has been a lot of work laying those foundations and results will be seen shortly.”

As the Maldives has not yet celebrated its second year under a democratic government, the vice president is sure these issues can still be resolved.

He said the government must be “much more consultative. We need to be more clear on what is being assigned and how that can be achieved.”

Dr Waheed defended his statements on ‘Hot Seat’ by reiterating that “I don’t see why we should be hiding our feelings now. We did not bring about this change to work in despair.”

He noted that despite the headlines today, “everything is OK” between him and the president.

Press Secretary for the President’s Office Mohamed Zuhair said the vice president’s interview “was not in an official capacity [as vice president], but as a party leader.”

“If he was going in official capacity we would get a notice, but this time it did not happen,” Zuhair said.

Dr Mohamed Jameel, president of the Dhivehi Qaumy Party (DQP), one of the parties that joined the MDP-led coalition that elected President Mohamed Nasheed’s administration in the 2008 elections, said he “agrees with Vice President Waheed completely.”

“I think [lack of consultation] is the very reason why many politicians from the coalition went away,” he said, adding “this is the final blow in the coffin.”

He said the problem was the government’s attitude: “Ever since they were elected, they have been saying it was a win for the MDP only.”

Dr Jameel said he thought the MDP had been “hijacked at gun point by their activists” and now the government was “conveniently giving into their demands.”

President of the Adhaalath party Sheikh Hussain Rasheed Ahmed, another coalition partner, said all the coalition parties had been having problems for a while “due mainly to political competition.”

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Islamic Ministry expresses concern over isolated congregations

The Islamic Ministry has expressed concern at the rising number of privately-held, unsanctioned congregations.

The ministry said it was “advisable” for such congregations to immediately cease worshipping in isolation and conducting sermons administered by scholars not licensed by the ministry.

The Islamic Ministry said that private congregations were against laws protecting religious unity.

”The Islamic Ministry does not believe that there is any reason to perform isolated congregations as the state is based on Sunni Islam, and formal congregations in the mosques are approved,” the Islamic Ministry said in a press statement.

The ministry advised Imams not to dispute religious issues or get into disputes over ‘Madhab’ (way of thinking, persuasion) , and to instead follow the Sunnah of Prophet Mohamed (PBUH) and to believe and return to the way that trusted Islamic scholars had advised.

Sheikh Ali Zahir said that the issue could be spoken about for a long time, but that the Islamic Ministry was the authorised department and had said its word.

However, a man who follows Islam in a private congregation told Minivan News on condition on anonymity that his group had decided to isolate themselves “because the current government is following a law established in 1982 by the former government, a law protecting religious unity which is contrary to the tenets of Islam.”

He said that according to the Constitution Article 10[b], “no law can be enacted contrary to the tenets of Islam.”

”So we do not have to follow the law protecting religious unity,” he said.

He said that according to the tenets of Islam there were no different ‘Madhabs’ on the Sunnah of Prophet Mohamed (PBUH).

”They force all the Imams to pray according to the Shafi’e Madhab, so we cannot follow the Imams who pray according to a Madhab, we follow Prophet Mohamed (PBUH),” he said.

He said another reason for the isolated congregations was that the former government ordered the Imams not to read ‘Gunooth’ during the fajr prayers.

”Now they read Gunooth when the Imams feels like it,” he said.

Furthermore, he said, the three powers of the government had been divided and Shari’ah Law had not been implemented in the Constitution and Penal Code, contradicting the tenets of Islam.

”According to Islam all the powers should be in one  hand,” he said.

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President ratifies compulsory vehicle insurance amendment

President Mohamed Nasheed has ratified an amendment to the Land Transport Act which requires drivers to obtain compulsory third party motor insurance for all vehicles.

The insurance bill is to come into force three years from the start of the Act, together with regulations stating that the mechanisms for investigation of accidents, identifying the cost of damage and claim for damage should be made public.

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Government offices to use new electronic communications system

The Cabinet has decided government offices will begin to use a new Government E-letter Management System (GEMS) to exchange communications electronically starting 25 April.

Government offices in Malé and the Southern Province will be the first to use GEMS.

The Ministry of Civil Aviation and Communication sent a report to the Cabinet on the issue. The new system is expected to make administration more efficient, reduce costs and improve delivery of services.

According to the President’s Office, the electronic system will “further improve the credibility, transparency and monitoring of the government bureaucracy” by enabling policy makers and decision makers to “take regular stock of the work of the respective offices and to ensure remedial actions in cases of delays in responses.”

Additionally, written queries from the public will be “more recorded and more readily available.”

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World Bank reports Maldives’ debt caused by former government

The World Bank has issued a report saying the Maldives was on the verge of economic collapse in 2008 when President Mohamed Nasheed’s government was elected, reports Miadhu.

According to the report, before the 2009 presidential elections, the Maldives was headed towards an economic crisis similar to that of Zimbabwe. The World Bank said the economic difficulties the country was facing was due to the previous government’s reckless fiscal discipline.

In late 2008 the country’s Gross Domestic Product (GDP) fell by almost 5 percent, while the government’s expenditure rose to almost 30 percent of the country’s income.

Adding to the previous administration’s increase in spending in their last two years in government, 50 percent of the state’s wage bill was going to civil servant salaries.

When the new government took over, the country’s debt stood at 110 percent of GDP according to Minister of Foreign Affairs Dr Ahmed Shaheed.

The International Monetary Fund (IMF) and the World Bank have made recommendations to President Nasheed’s administration on how to reduce the debt in a responsible manner, and the government has been implementing these recommendations.

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