Akon to perform live in “the biggest ever event in the Maldives”

Well known R&B singer Akon will perform a live show in the Maldives, after he was denied a visa in Sri Lanka because of a scene in one of his videos depicting a woman dancing around a Buddha statue.

Director of Platinum Entertainment Lasantha Samarasinghe, the company organising the ‘Super Fest 2010’ show, said it would be be held at the outdoor cricket stadium on the 23 April and would be “the biggest event ever held in the Maldives.”

“We are expecting 25,000 people to come to the show,” he said, including many tourists.

Samarasinghe said if this event was successful the company “will bring even more Hollywood superstars to the Maldives.”

Press secretary for the President Mohamed Zuhair said that the government had given the permission for the show to take place, saying it “fully supports these kinds of events.”

“It will promote the country’s tourism sector and provide a good opportunity for Maldivian singers,” he said.

Zuhair also said that President Mohamed Nasheed was keen to attend the show.

The show’s main sponsor will be Villa Television, with ‘official drinks’ provided VB Mart and Foco energy drink.

A Villa spokesperson claimed this was “the first time a superstar is performing in the Maldives.”

Tickets will go on sale from Friday.

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Comment: The Maldivian Economic Situation

Economics is often referred to as the ‘dismal science’, partly because it mostly concerns us when things start to go bad.

In this sense, economics is a lot like medicine or public health. And so it is highly appropriate that we start comparing economic remedies to medicine – like what the President did when he asked the donor community for a ‘spoonful of sugar to help the medicine go down’.

You may find yourself asking what exactly is the sickness for which we have to take such a bitter medicine. So what I will attempt to do in this first part of the article is to try and explain to you exactly what happened to our economy – in as plain, jargon-free, language as I can.

In the second part of the article (to follow soon) I will try and show you the remedies we need to take and to shed light on how to avoid getting into a similar mess in the future.

In order to understand our recent economic history, you must first know the three ways in which a government can affect the economy: fiscal policy (how much it spends from its taxes, revenues or borrowings) or monetary policy (how much money it prints) and exchange policy (how it allows goods and services to come in or go out of the country). So lets look at how our Governments – both Gayyoom and the MDP – have used these levers over the last few years.

The Big Wave

The key defining moment to start is the Tsunami of 2004 where we faced a previously unimaginable event that brought economic activity to a virtual standstill. The tsunami, however, happened in the context of two other very key social phenomena. Firstly, there was an emergence of a movement calling for political change that proved especially resilient and vocal. Secondly, there was a dramatic increase in global prices – food and oil prices especially.

The response to this was naturally a large spending program to rebuild the country. No doubt, the initial spending by the Government went to Tsunami affected purposes. However by 2006-07 the Government started doing two things.

First, it increased the size of the civil service from about 24,000 to about 32,000 people, and secondly increased their average salaries from about MRF3,000 to MRF11,000. As a result, government spending went from 35% of GDP in 2004 to about 60% of GDP in 2006.

I need to take a few more moments just to put this level of spending into perspective. Firstly, it is mentioned above that we expanded the civil service to be almost 32,000 people – that is almost 11 per cent of the total population of the country!

The comparative figure for other small island countries (like in the Caribbean) is at four per cent. Furthermore, the public sector wage bill (ie. all the salaries and allowances paid to this 11 per cent of people) accounted for almost 50 per cent of all our expenditure and almost 70 per cent of all our revenue.

Of course, all this expenditure is fine if we can actually pay for it. The question then becomes – where did the money for all of this increased expenditure come from?

It came from three sources – grants, loans and the additional revenue from leasing out a number of new resorts. The understandable impact this had on the supply of money was a three-fold increase.

One notable side-effect of this was a rising inflation of more than 20 per cent over the years: a factor that contributed to MDP making controlling inflation a major policy pledge. However all of this would have been manageable but for the third policy lever of a government – the exchange rate.

You would no doubt know that we in the Maldives have a pegged exchange rate – ie. it is fixed by a central authority to a specific currency at a specific value (in this case Rf12.85).

A policy of increasing public spending, and thereby increasing our supply of Maldivian rufiyaa AND keeping a fixed exchange rate, can only work if we also keep increasing our foreign currency stock. This is because the pegged exchange rate works on the assumption that if somebody comes to the MMA or Bank with any amount of rufiyya looking to buy US$, we should be able to cater to this.

With increased rufiyaa in circulation there was a large increase in demand for USD, but there was no real increase in supply of foreign reserves. This caused the ‘real’ exchange rate to shoot above Rf12.85, and thereby cause even worse inflation. As trust in the system started to disappear, those who actually had US$ no longer trusted to put the money into local banks.

All of this enormous stress on the system was there well before the greatest global economic collapse since the 1930s struck.

The Global Financial Crisis (GFC)

The two specific impacts of the GFC were two fold.

First there was a ‘credit crunch’ – the flow of finances between international banks stopped because none of the banks trusted each other. Financing to all those many resorts that were given out started drying up so our reserves fell even more. Secondly, tourist numbers started retrenching – and those tourists that did come spent a lot less.

It was about this time that the historic change in government took place and the MDP came to power. To their horror, they soon came to realize that they inherited a fiscal situation far worse than they had imagined.

This was due to the fact that government spending is often done through contracts that have long-term implications. Governments sign contracts that burden future governments to payments – both in terms of principal and interest payments.

The amount that the MDP government had to pay in interest alone – for projects that they themselves had nothing to do with – rose from three to eight per cent of GDP between 08-09.

Here therefore we need to introduce the final basic concept – that of the fiscal deficit. This simply is the difference between what we earn and what we spend divided by our GDP.

In 2008, this was at about -12.5 per cent, but the worrying thing was that given the fall in revenue projected by the GFC, this was projected to rise to almost 33 per cent in 2009.

Once again let’s put these figures in perspective. The highest the fiscal deficit reached in the USA – in 1945 straight after the Second World War – was at about 20 per cent.

Obama’s hugely expensive budget this year will increase his to just over 11 per cent. In Sri Lanka, the IMF refused financing to the current President because his latest fiscal deficit reached 10.5 per cent!

However way you look at it, we are in a desperate, desperate situation.

Don’t Blame it on the Sunshine

A key question you may therefore have is – who is responsible for this mess? Was it pure malice? Incompetence? Or did we just get unlucky?

Those who seek to justify the acts of the former regime would say that yes, they expanded the domestic money supply, but what you must also keep in mind is that they had just successfully bidded out 60+ resorts.

Even if you take a conservative estimate, we are talking about almost US$3 billion of investments.

Even assuming 50 per cent Maldivian staff, this is about 7,200 new jobs in the resorts alone. The total bed capacity increase was expected at 12,000 – so that is about US$4.2 million PER DAY in revenue. As such, an expansionary fiscal and monetary policy was justified on grounds of the revenue, returns and most importantly, reserves from this resort expansion. They could never have been expected to foresee the Global Financial Crisis coming.

On the other hand, critics would argue that in the years of Gayyoom’s presidency, especially in his last two years, rational economics was not the order of the day. Rather, the preoccupation of the regime was to stay in power at all costs.

If that meant bringing 10,000 extra staff and increasing their salary four-fold, as well as signing up to countless and often pointless public expenditure projects by borrowing large sums of money at exorbitant interest rates – so be it.

Critics would argue that if the Government were interested in anything other than self-preservation, they would have at least invested the money more wisely. It was reckless spending for purely political aims with no thought to the future health or wellbeing of the economy.

My own personal viewpoint is that we should leave the blame game for another day – if we take it up at all. The challenges to our economy, and by definition our fragile democracy, are far too great to waste time pointing fingers. I understand that political points have to be scored, but there are no elections in sight for at least 3-4 years.

We have arrived at a situation where we need to politically co-exist if we are to heal our economy. For now, leave aside your talk of past corruption or the future hell that awaits us if we do not veil our sisters. We have jobs to create, youth to educate, industries to develop and opportunities to exploit. I for one would like to look back on these days as a time when we all, blue and yellow supporters alike, did some pretty remarkably constructive things in the Maldives.

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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Australian architects design floating skyscrapers for the Maldives

Australian architects have proposed floating skyscrapers to be built in the Maldives in an attempt to combat rising sea levels.

The designs, named ‘Maldives Floating States’, were submitted as part of the 2010 Skyscraper Competition organised by eVolo architecture magazine. They made the finals but did not get into the top three.

Architects William Fong, Joshua Loke and Livee Tan proposed that, in case rising sea levels were to flood all of the Maldives, the entire population could be relocated onto 1,000 metre tall floating structures.

They believe this way, the people of the Maldives could continue to live in “its own waters” and not lose its culture and heritage.

They have called their designs “engineering marvels of buoyancy and height” with the proposed structures to be anchored to the sea floor more than 1,000 metres below the surface.

To accommodate growing population, they suggest the towers’ height can be increased or new towers can be built, “like reclamation, only floating.”

In early March, the government signed an agreement with Dutch Company Dutch Docklands to build a floating golf course and and hotel.

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Details of funds pledged at Donor Conference will only be available with donor’s consent

World Bank Country Director for Sri Lanka and the Maldives, Naoko Ishii, said details of the pledges made at the Donor Conference would only be released with consent from the donors.

Speaking at a press conference after the closing session of the conference yesterday, Ishii said some countries did not want to publicly announce the exact figures of their pledges.

She added that many of them had internal procedures which prevented them from announcing the figures at this time, and they needed to discuss and approve the pledges in their home countries before announcements were made.

Senior government officials said many countries’ fiscal years did not begin in January, like Australia and Japan, for example, which meant their pledges would not come into force until the beginning of their new fiscal year.

President Mohamed Nasheed said this year’s pledges surmounted the amounts of previous years because the international donor community did not have faith in the previous government.

He added that donors are confident of the democratic system of the Maldives and the support from the World Bank and International Monetary Fund (IMF), making this year the most successful Donor Conference to date.

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Maldives announces US$313 million in pledges at Donor Conference

Speaking at the close of the 2010 Maldives Donor Conference, Vice President Dr Mohammed Waheed Hassan announced that the government has received pledges of support totalling US$313 million for a period of three years.

The crowded hall of donors at Bandos Island Resort and Spa included delegations from countries as diverse as Saudi Arabia, Australia, Japan and Norway, as well as international financial groups such as the International Monetary Fund, Islamic Development Bank and the sovereign wealth Abu Dhabi Fund. A breakdown of the pledges is not currently available, Minivan News was told, as several donor countries had requested time to consult their home agencies before solidifying the figure.

In the run-up to the donor conference the government identified key priority areas for investment, alongside budgetary support: macro economic reform, public sector reform, good governance, social development and climate change.

“I am grateful for the confidence you have shown in our country,” Dr Hassan told the donors. “This conference has been an opportunity for us to listen to donors’ views, and we have identified ways to up our coordination and cooperation with the donor community,” he said.

The government had been aiming for US$450 million, he said, although several senior government officials later told Minivan News that they considered “60-80 per cent of that target” a major success. Furthermore, they claimed, a great deal of ‘behind-the-scenes’ negotiations over the two day event would likely lead to further commitments.

There was, Dr Hassan said in his address, “an abundance of goodwill and more assistance will be forthcoming with more follow up from our side.”

He promised donors the government would “work with you to strengthen our management system”, and said the participation of donors was “a vote of confidence in this government and our strong democratic mandate.”

“You have heard about many of the challenges over the past two days. The fact that drug addiction is the biggest problem among our young. The fact that clean water is still a challenge on many islands. The fact that reducing the soaring budget deficit has been painful in an economy over-dependent on government expenditure,” Dr Hassan said.

Furthermore, he said, “democracy remains fragile in the Maldives. We must work to guard the civil society and protect the freedom of the press. We must work hard to consolidate our hard earned freedom. Much progress has been made. But more work needs to be carried out, and we cannot deliver this vital thing on our own.”

In his closing comments, Dr Hassan acknowledged that the Maldives was known around the world less for its social and economic challenges, “and more for our commitment to confronting the issue of climate change – our commitment to carbon neutrality is the strongest in the world.”

“Although we are a very vulnerable country to sea level rise I should make clear that we are not going anywhere. Not yet.”

The British High Commissioner to Sri Lanka and the Maldives, Dr Peter Hayes said he commended the Maldives “on the significant progress it has achieved as a young democracy working in a challenging economic climate.”

“In an era where international partnerships are vital, I welcome the proactive approach to international engagement the Maldives has taken,” Dr Hayes said.

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Parliament votes to dismiss Auditor General 43-28 in favour

Parliament today voted to dismiss Auditor General Ibrahim Naeem, with 43 voting in favour of the no-confidence motion and 28 against.

President Mohamed Nasheed was last night reported to be seeking to urgently meet with MPs, foregoing a function marking the close of the donor conference.

Maldivian Democratic Party (MDP) MP Mohamed Shifaz said all the party’s MPs had voted against the no-confidence motion on Auditor General ”as it was a responsibility of the government to defend all its institutions, and we are on the government’s side.”

On the other side, MPs of the opposition Dhivehi Rayyithunge Party-People’s Alliance (DRP-PA) coalition were joined by seven independents, the two Dhivehi Qaumee Party MPs and the sole Republican Party representative.

Shifaz said he believed the Auditor General had not committed anything that warranted a no-confidence motion.

”DRP want to remove him from that position due to the reports he released, which accused many senior leaders of corruption including former president,” he said. ”They had personal issues with him.”

He claimed the parliament procedures need to be changed and there were many things to be corrected.

”The speaker has not revealed the Anti-Corruption Commissions report to MPs yet, because it contains things which accuse his own party’s members of corruption,” Shifaz claimed.

DRP MP Ahmed Ilham said it was now “very clear” that the Auditor General was corrupt.

”Independent MPs who always vote on MDP side voted on DRP side today,” Ilham said.

He said the government was trying to defend Naeem in many ways, “which proves that the government is promoting corruption in the country in the name of erasing it,” he said.

”MDP MPs forced the parliament to be canceled two days, and MDP activists disrupted the peace of the nation just to defend the Auditor General.”

Ilham said that if there was a credible corruption case against former president Maumoon Abdul Gayoom, “the government should not wait a single second before investigating those cases.”

”Those are just rumors they spread,” he said. “Why won’t the government go ahead and prove it to the people?”

Ilham said while people believed Naeem was independent as the Audit Office was a independent institution, ”that the government tried to defend him proves he was a man fully on MDP’s side.”

Naeem was appointed by Former President Gayoom and a DRP-majority Majlis.

What happened

The Auditor General was accused of corruption by the Anti-Corruption Commission (ACC) for using the government’s money to buy a tie and visit Thulhaidhu in Baa Atoll.

Naeem claimed the charges were an attempt to discredit his office and prevent him from reclaiming the government’s money stored in overseas bank accounts.

“A lot of the government’s money was taken through corrupt [means] and saved in the banks of England, Switzerland, Singapore and Malaysia,” Naeem claimed two weeks ago, during his first press conference in eight months.

The motion to dismiss him was put forward by the parliamentary finance committee, chaired by Deputy Speaker Ahmed Nazim, who the previous week had pleaded not guilty to charges of conspiracy to defraud the former ministry of atolls development while be was Managing Director of Namira Engineering and Trading Pvt Ltd.

Tension over the motion led to violent clashes inside parliament, which spread to supporters of both major parties outside the chamber. Police were forced to use tear gas on several occasions over the weekend to subdue crowds of violent demonstrators.

Press Secretary for the President Mohamed Zuhair claimed the DRP were trying to remove Naeem because he had accused the party’s senior leaders of corruption during their administration.

”They are intending to spread doubt among the people, and they think it will be easier to defend themselves if the Auditor General is dismissed,” Zuhair said.

The dismissal of the Auditor General would “not be a big loss” to the government’s attempts to recover the money, ”as there are many professional accountants in the Audit Office”, Zuhair said.

He said all the political benefits being attributed to the no-confidence motion on Auditor General were due the government, ”as [Naeem] was elected by a majority of DRP MPs.”

The dismissal of the Auditor General is unlikely to slow the government’s appetite for reclaiming state funds it believes are stashed overseas.

Today during the closure of Donor Conference, President Mohamed Nasheed confirmed that a “stolen asset recovery program is part-and-parcel of the World Bank projects.”

“We are a member of that program and will of course be working within the framework available to us,” he said.

“If there are any stolen assets I’m sure we will be able to identify them, and if they are ill-gotten I sure we will we will be able to repatriate them.”

There was “no timeline”, the President added.

The Stolen Asset Recovery program (StAR) is a 2007 joint initiative between the World Bank and the UN Office of Drugs and Crime (UNODC), which according to UN Secretary General Ban Ki-moon, “fosters much needed cooperation between developed and developing countries and between the public and private sectors to ensure that looted assets are returned to their rightful owners.”

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Girl abducted, drugged, filmed and gang raped by 15 men on Hithadhu

A group of 15 men abducted, drugged and gang raped a 20 year old girl on the island of Hithadhu in Seenu Atoll last Friday night, while reportedly filming the incident wit a mobile phone.

Regional commander for Addu Atoll, Chief Inspector Hussein Adam, said three men had been arrested in connection with the attack, which occurred around 8:30pm on Friday night.

”Two men came by on a motorbike while she was outside her house, and forced her to sit between them,” Hussein said.

The two men took her to an uninhabited area on the island, 30 minutes walking distance from where she was abducted.

”The 15 men forced her to drink a suspected liquid drug and she became drunk,” Hussein said. ”They used box cutters to threaten her.”

Atoll Commander for Addu Adam Niyaz said police were informed of the incident at 1:00am on Saturday morning by the girl’s parents, after she returned home.

Police took the girl to Addu Regional Hospital. Hussein noted that she was “unable to walk.”

Head of Addu Regional Hospital Ahmed Mohamed said the girl was brought to the  hospital on Saturday was discharged yesterday.

”There were no injuries outside her body,” Ahmed said, ”but as she was sexually assaulted by 15 men her sex organs were injured during the incident.”

Niyaz said the three men arrested in connection with attack had many police records involving drug offences and gang-related crimes.

He said Hithadhu police station was continuing to investigate the case.

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Olympic rower prepares for 60km crossing in early morning darkness

Silver-medal winning Olympic rower Guin Batten has begun final preparations for the first recorded solo crossing of Maldives’ zero degree channel in a row boat.

The 42 year-old British medallist, who holds the world record for a solo crossing of the 30 kilometre English Channel, now intends to row 60 kilometres across the ‘zero degree’ channel that bisects the equator between Foammulah and Huvadhoo Atoll.

Touching down in Male’ on Saturday, Batten and her support team went straight to the meteorological office and decided to commence the attempt around 2:00am early tomorrow morning.

For over seven hours she expects to struggle against the swells, tides and currents of the Indian Ocean in her 35 kilogram rowing boat.

“Seven hours if everything goes right,” Batten told Minivan News, before her trip down to Thinadhoo.

The early morning start offers the best combination of weather conditions, although Batten acknowledges that rowing in the dark will be a challenge.

“Because it’s dark you don’t see the waves coming, but you can feel them rolling under you,” she explained. “There will be a technical element involved, because you lose power if the oars catch the water in an odd way, or you ‘catch a crab’ (miss the water altogether).”

For navigation, Batten has an onboard GPS device in the boat, as well as an ordinary magnetic compass by which to steer. Altogether, “I’m aiming for a speed of 19 strokes a minute,” she said.

Even fluid consumption will be a challenge – Batten will have to consume two litres of water an hour just to replace the fluid lost through sweat. Moreover, her hands are already blistered from her endurance training in the UK in the lead up to the event.

Batten's team chart the crossing, which she will attempt at 2:00am early tomorrow morning..
Batten's team chart the crossing, which she will attempt at 2:00am early tomorrow morning.

A heritage of rowing

Batten’s attempt at the zero degree crossing is not just a personal challenge, Batten told Minivan News. She is passionate about reintroducing the lost art of rowing to the Maldives, which largely disappeared across the country in the 80s with the proliferation of electric motors.

“Rowing is very technical and different countries have unqiue styles,” Batten explained. “At the moment the people who know [the Maldivian style] are probably 60 years old, so there’s a risk that all that knowledge and understanding could disappear.”

As well as inspiring Maldivians to row, Batten’s team are working on bringing over six boats to set up a rowing club. For now, however, she is focused on what the Indian Ocean may throw at her.

With all it challenges to contend with, she acknowledges that a key goal for her support boat “will be to remind me to have fun. The glass is half full!”

Batten’s world-first attempt at the zero degree crossing is supported by UK-based NGO Friends of Maldives, with assistance from British Airways, Coco Palm Resorts (Maldives) and Crew Room.

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Japan to fund 400kWh pilot solar project

The Japanese Government’s official donor company, Japan International Cooperation Agency (JICA), has agreed to invest 1 billion yen (US$11.1 million) in the Project for Clean Energy in Malé.

The project would see solar panels capable of providing up to 400 kilowatt hours (kWh) installed in five locations around Malé. By comparison, STELCO’s Malé powerhouse currently has an annual peak usage of 32,618 kWh.

The solar agreement was signed by High Commissioner of the Maldives in Sri Lanka, Ali Hussain Didi, and Chief Representative of JICA, Akira Shimura. The signing took place at the Embassy of Japan in Sri Lanka on 25 March 2010.

Feasibility studies for the project were undertaken by JICA in 2009 and the project is due to begin in April 2011 and is expected to be completed by October 2011.

The five selected locations are the President’s Office, Maldives Center for Social Education (MCSE), State Electricity Company Limited (STELCO), Thaajuddeen School and Hiriyaa School.

According to JICA, the project will “promote the utilization of solar energy as an alternate and renewable resource of energy and undertake adaptation measures against climate change by reducing Green House Gases.”

Research officer and local representative of JICA, Mohamed Aiysh, explained that JICA had a major interest in the development of the Maldives and had been assisting with food aid since the 1980s.

As the largest privately owned multilateral donor organisation in the world, Aiysh said JICA’s assistance to the Maldives, and other countries around the world, was “very important to the international community” and a “benefit to mankind.”

The agreement is the result of a request for aid made by the Maldivian government to the Japanese government as part of the Maldives’ bid to be carbon-neutral by 2020.

Aiysh said the Ministry of Housing, Transportation and Environment (MHTE) is JICA’s “local counterpart” and they will be responsible for implementing and running the project.

According to Minister for Housing, Transportation and Environment Mohamed Aslam, that solar panels are “expected to have a capacity to produce 400kWt of solar energy at any given time,” and the JICA-sponsored project is a “pilot work” expected to cut energy costs in the long run.

He said the ministry has three more renewable energy projects underway, all of them in the feasibility study phase.

A Memorandum of Understanding (MoU) has been signed with Indian company Suzlon Energy for a 25 megawatt wind farm in Addu Atoll.

Another MoU has been signed with Winwind, a Finnish company that builds latest-generation wind turbines, to begin work on a wind farm in the Maldives.

The third MoU has been signed with Falck Energy, also for wind-produced energy.

Aslam said “the vision we have is to make all energy in the country renewable by 2020.”

Ali Rilwan from environmental NGO Bluepeace said he didn’t think the amount of surface space required for solar-powered energy would be sufficient to power all of Malé.

“We don’t have that kind of surface. You would need to cover all of Malé [in solar panels] to produce enough energy.”

Rilwan said wind energy was a more feasible and practical option to replace the amount of fossil fuel energy STELCO is currently producing, but he thought the solar panels are “ideal for powering street lights and park lights. Not for buildings.”

Japan has previously donated the sea wall in Malé, the construction of the MCSE, and the reconstruction of Thaajuddeen School and Hiriyaa School, among others.

JICA is currently rehabilitating harbours in seven islands, establishing sewage facilities on three islands, and collaborating with MHTE in the field of sewage systems.

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