Day: April 19, 2011

Comment: The big picture, rethinking policies

In the past couple of weeks, we have seen several responses to the growing gang violence in the country with high level committees set up to look into the matter.

We also saw a national security seminar for the tourism industry in response to recurring raids on resorts which left a 19 year-old dead two weeks ago.

These are immediate and reactionary measures. We can only do so much to prosecute young criminals and fill up the already crowded jails. If we want real answers to these problems, we need to look at a bigger picture.

The same applies to the exchange rate situation. Beyond devaluation, there is much to do to fix the macro-economic situation. To me the key words are ‘long term’ and ‘priorities’. We need long term strategies and to identify the right priorities to solve our growing economic and social problems.

A long-term growth strategy

The economic section of the government’s manifesto ranges from pledges on cost of living, tourism, fisheries, agriculture, SMEs, water, sewerage, employment, environment and to date, implementation of these pledges appear to be ad-hoc and piecemeal. There is no overall direction to regain recovery and growth of the economy.

The government talks about diversification of the economy. The government also declared that Maldives is open for business and wants see increased investments and private sector role in as many sectors as possible. Fiscal adjustment measures have been initiated here and there and now there is a growing reference to market forces and a market based economy.

We need to look above all these plans and the long list of manifesto pledges and decide on what the economy should look like in the next 5 to 10 years, what the share of tourism would be, how growth can take off and what impact we want to see on incomes, on private sector and on job creation. Above everything we need a long-term economic growth strategy that is clear and consistent.

Setting the right priorities

The government’s manifesto and the five year development plan are overly ambitious with 5 key pledges and 20 odd other pledges. Many ministries are overwhelmed with new policies, projects and programmes everyday where there is only a limited pool of technical expertise and managerial staff to roll them out. In my opinion, political disillusionment and public frustrations are a result of too many promises. Investors, donors, private sector and the public are often confused, not knowing the real direction of the country’s economic and development agenda. To me, the priorities are simple and straightforward. We need to decide on growth sectors and growth hubs.

Growth sectors

We constantly talk about the high level of dependency on tourism and the vulnerability of the economy to external shocks. We are increasingly seeing a decline in fisheries and despite many efforts, share of agriculture is still negligible. The government often refers to plans to diversify tourism and fisheries. There are the long standing debates on our competitiveness in potential sectors such as ports services, off-shore financial services as in the Caribbean and Maldives specialising as a knowledge-based economy, as a hub for  R&D on climate change, marine research and even to the extent of specialising on democratic and human rights research.

The reality is that as a small island nation we cannot do it all. We need to focus on one or two sectors and we need to prepare our labour force, our laws and institutions to specialise in these sectors and equip the private sector and gear donor assistance and foreign investments to develop these sectors.

Growth hubs

We have a tradition of not giving consideration to population and migration in development planning. The failure to predict and prepare for the explosion of school leaving population gave rise to joblessness and the related youth problems we see today. The failure to plan for an explosion of migration to Male’ from the atolls has caused over-crowding, harsh living conditions, congestion and pollution in Male’ which in turn causes crime and violence that keeps escalating. If we fail to plan for an ageing population in the next 15 years, the consequences could be worse.

The government insists on extending services to all islands and on increasing accessibility of services through connectivity and transport. The reality is that service provision even with ferries to 200 islands is unrealistic. It is costly to not only invest but to maintain high quality education, healthcare, social services, security, utilities, harbours and not to mention airports. We cannot afford it if the government wants to achieve a balanced budget. We cannot afford it even otherwise given the limited human capital. Attempts to expand tourism to all parts of the country have not had a major impact on reversing migration or on local economic growth. The resorts run on a parallel economy and have not opened up economic opportunities for islands except for remittances of employees.

Additional flats on the islands is definitely no solution. Those who move to Male’ are looking for better education, healthcare and better job prospects. The government cannot guarantee all three services to every single island in the country. Villingili and Hulhumale’ have not relieved housing pressures and living conditions in Male’. These satellites islands are simply getting filled up with migrant families everyday and this trend will accelerate when additional flats are built in Hulhumale’ or in Gulhifalhu. Housing pressures, living costs, overcrowding in schools and hospitals will only worsen.

The government needs to decide on one or two growth hubs in different parts of the country based on population needs and migration patterns. The dispersed 200 inhabited islands will never have scale for commercial development and economic growth. The government should leverage investments, people, infrastructure and direct services to the growth hubs. It is the only option for improving quality of life of people in Male’ and outside of Male’.

Economic and social transformation

The real solution to gang violence, drugs and crime and the exchange rate situation is therefore a long term growth strategy that prioritises sectors for economic diversification and hubs for population concentration.

Thirty-odd election pledges on 200 islands is simply impossible. I echo Imran’s conclusions in an earlier article that we need a ‘bold government that shows leadership’. We need to acknowledge the big picture, give up reactionary and ad-hoc approaches, and show consistency and vision. The government should stop jumping on big ideas and take the national institutions, investors, donors and the public towards a focused and realistic recovery and growth path.

Without thinking long-term and without setting priorities, I don’t see how we can really solve the growing problem of dollars, drugs, crimes, violence, social disillusionment and even political frustrations that we see everyday across all parts of the country.

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]

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19 year-old stabbed, days after police said most dangerous nine criminals were detained

Unknown assailants stabbed a person in the Mahchangolhi ward of Male’ last night, three days after the Deputy Head of the police’s Serious and Organized Crime Department (SOC) Inspector Abdulla Nawaz told the press that the most dangerous criminals in Male’ had been detained.

Police Sub-Inspector Ahmed Shiyam said the victim was attacked in Nikagasmagu of Mahchangolhi ward.

”His condition was not too serious,” Shiyam said. ”It is too early to say whether it was a gang fight.”

He said two men were arrested in connection to the case.

Only last week, a 25 year-old man identified as Ahmed Mirza died after he was attacked with iron bars and other weapons while he was sitting in the children’s park in Villingili.

Mirza was attacked after he reportedly made some comments about a girl.

Last Thursday, Inspector Nawaz informed the press that nine persons police believed to be dangerous criminals were now held in detention.

The nine persons Nawaz identified were: Ibrahim Shahum, Rilwan Faruhath, Ahmed Shiruhan, Abdulla Naseer, Ahmed Shareef, Mohamed Visham, Ibrahim Abdulla, Gassan Ali and his brother Hassan Ali.

Meanwhile, the parliament has commenced work to amend the Clemency Act to execute persons sentenced to death, while the Criminal Justice Procedure Bill was also presented to the parliament at the same time and is now currently at the committee stage.

In an effort to curb the rise in gang violence, President Mohamed Nasheed has formed a Crime Prevention Committee led by former Defense Minister Ameen Faisal.

So far the committee has held meetings with the Supreme Court and almost all concerned authorities, although it has yet to announce any progress.

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Airport developer concedes certain “mistakes” made amidst service improvement aims

The CEO of Male’ International Airport, which is currently operated by Indian infrastructure group GMR, has said that although the company had made certain mistakes in terms of its finance policy of late, management was confident of learning from them to deliver significant changes to the site over the next three months.

Andrew Harrison, who took the CEO position at Male’ international Airport when GMR took control of the site in November, told media today that despite significant work already underway on overhauling behind-the-scenes operations, he was still learning how to deal with stakeholders like airlines and exporters at the site.

The week has threatened to be potentially difficult for GMR, with reports emerging in the press of the company’s alleged plans to increase land lease rent at the airport by 50 percent – the first such price change enacted in a decade. News of the announcement had led some local airlines and a number of import companies raising concerns at the reported increases and the possible impacts on their operations.

Harrison nonetheless claimed that he hoped the public, as well companies working with the airport operator, would soon see more of the changes resulting from its investment in the form of operational and aesthetic improvements at the existing terminal.

“People are expecting to see a lot of change immediately, the change does take a little time, but actually there is a lot of work going on behind the scenes. What we will now see over the next three months is rapid progress where the changes will be more visible to the public,” he said.

“We had, through our concession agreement, been given a mandate to improve levels of service in the existing terminal areas, so this was focused on baggage processing time and baggage delivery time and the checking of passengers. What we are recognising is that people have much greater expectations, so we are spending more money than we are required to in terms of the concession agreement to actually make [the terminal] a much nicer environment.”

The pledge comes as newspaper Haveeru this week reported that airlines such as Island Aviation and seaplane group Trans Maldivian Airlines were concerned at how the implementation of future rent raises could impact on their operations.

Some importers working for the tourist trade have also told Minivan News that they have faced a sudden “100 percent increase” in charges for containers that they need to hire at the airport for their stock.

One importer and supplier of alcohol to a number of tourist properties in the Maldives, who wished to remain anonymous, told Minivan News that a number of the company’s business peers had looked to form a committee over concerns at rate hikes they claim have been deemed “non-negotiable” by GMR.

According to the supplier, the airport operator had acted “unprofessionally” in suddenly announcing that the monthly rates for 70 feet containers at the site were being doubled, meaning certain companies potentially face an additional bill of up to US$45,000 a year to work from the site.

Although the supplier said that they were being given a month to rewrite terms and conditions within new contracts that they were unhappy with, the container rent was seen as a “non-negotiable issue.”

In today addressing the issue of lease rent specifically for local airlines, Harrison denied that any official price had been set, adding that negotiations were now being held with key lease holders like Island Aviation and the company’s sea plane operators over cost amendments that he said remained fully open to negotiation.

Amidst press reports about certain concerns by some lease holders over the potential rise in airport rent and the possible impacts on their operations, Harrison stressed that in future, the company would aim to learn lessons and consult stakeholders “much in advance of any envisaged changes”.

However, the Male’ International Airport CEO claimed the company would still aim to push ahead with adjusted charges in areas such as land lease rent to ensure changes could continue to be funded at the airport.  Harrison claimed that this rate increment would remain one of a “few” financial changes expected to be needed at the airport at present.

Though he did not confirm when the decision to potentially amend rent rates had been decided, Harrison claimed that GMR was working from a long-term development and cost plan set out in its original concession agreement.

“I want the airport to be profitable, but I want it to be responsibly profitable, because with those profits we are able to do many things including the development of the airport ongoing. [By] November 15 2011, most of this work will be done, but actually we will continue, it won’t end. There will continuous improvements all the time,” he added. “These improvements have a cost to them, so we need to have a business model that is responsibly profitable and trying to be responsibly profitable means that when you have different ways of doing things, you must engage your stakeholders in dialogue. We didn’t fix a [rent] price.”

According to Harrison, the potential increase in land rates from US$6 per square metre to US$9 for the same area were primarily expected to impact the operations of Island Aviation and the airport’s two seaplane operators with discussions already underway with them in addressing the issues.

A spokesperson for island Aviation confirmed to Minivan News that the company was currently in a “dialogue” with GMR though no out come had as yet been reached.

In trying to allay fears of further cost rises for stakeholders, Harrison claimed that he hoped to try and address the airport’s partners and customers like suppliers and service operators differently over future notices of change.

“I think one of the lessons that we are also learning is that people would like to have this dialogue much in advance of any envisaged changes. So what we are saying is that, ‘right, we have done a range of changes, let’s stop there now,’” he said. “Anything we want to do let’s have a discussion well in advance to understand the impact of changes we well make.”

Harrison took the example of requirements for new VIP and other lounges at the airport that had been requested by airlines to bring them up to the standards expected from “premium passengers”. The airport CEO said that he expected about US$500,000 to be spent on the project in total to try and meet the demands of airline companies.

“In this business model, what we’re trying to see is how much has to be spent and how which will be recovered in the time available. Don’t forget, this terminal has a life of about two and a half years before we move over to the new terminal and on the basis of that can we stay within the existing costs,” he said. “On the basis of that, can we stay within the existing costs? If we can’t what will be the difference [in charges]? Let’s discuss this with the airlines first before we announce, publish or indicate anything.”

In future, Harrison claimed that the company would try and change its current system of issuing communication about proposed changes before starting dialogue with the companies involved, claiming he would look for “better ways” to do things.

Alongside the issues of rent, Harrison conceded that he was not entirely happy with the manner that the company had reacted to a decision by the Maldivian government last week to amend an longstanding set US dollar exchange rate of Rf12.85 to within 20 percent above or below the figure to attempt to alleviate shortages of the currency.

“We’re human beings and sometimes we don’t always get it right. One example of where we didn’t get it right was that as soon as the announcement came from the Maldivian Monetary Autjority (MMA) about floating the exchange rate, we issued a communication announcing an exchange rate of Rf15.42 [to the US dollar],” he said. “That was incorrect of us to do so quickly. We didn’t need to do it. We could have waited to find out what financial institutions such as the banks were going to do before we did that. I have issued a further communication indicating that we will take the best available rate made by the three banks here in the Maldives.”

An interview Minivan News conducted with airport CEO Andrew Harrison last month about his experiences in the Maldives and plans for the airport can be read here.

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