Amendments were proposed to the Tourism Act today to extend leases by two years to offer a “construction period” for tourist resorts, hotels and guest houses with stalled development.
Presenting the amendment bill to parliament, MP Mohamed Mujthaz of the opposition Dhivehi Rayyithunge Party (DRP) explained that the legislation would write-off unpaid fines from the new resorts as heavy fines were an impediment to financing the development or attracting foreign investors.
“Of the 84 islands leased for resort development, only 10 have been completed while 74 have not,” he said. “With the current prices in the construction industry, millions of dollars are needed to develop the most ordinary resort. Considering the 74 islands with stalled development, this is a large amount.”
He added that local banks did not have the capacity to finance the projects while international financial institutions were not “too supportive.”
If passed into law, the proposed amendments would also replace existing guidelines for calculating fines for non-payment of rent. Under the new rates, fines for non-payment of rent for one quarter would be set at five percent of the total rent; 12 percent for two quarters; 18 percent for three quarters; 25 percent for three quarters; and 50 percent for one year of unpaid rent.
Moreover, article 8(c) of the bill states that the government must not charge rent for the two-year construction period.
In the preliminary debate on the amendments, MP Riyaz Rasheed of minority opposition Dhivehi Qaumee Party (DQP) criticised the current government for “not paving the way to obtain loans” and leasing additional islands for development.
DRP MP Yousuf Naeem however noted that the amendments had “serious problems.”
Naeem – affiliated with the Z-faction of the DRP – claimed that similar amendments previously passed to extend resort leases to 50 years “is now in the process of being abolished by the Supreme Court.”
“The reason is because some honourable MPs voted for it in violation of clause 158(a) of parliamentary rules of procedure,” he explained, referring to a conflict of interest on the part of resort owners in parliament.
The MP for Felidhoo noted that as some resort development projects had been stalled for six or seven years, he did not support a further extension of two years with suspended rent.
“These islands were leased after competitive bidding processes with many parties,” he said, adding that it would be disrespectful towards the rights of losing bidders if the government were to write-off debts or unpaid fines.
“The government is owed US$154 million in fines alone, not to speak of rents,” he continued.
MP Mohamed Riyaz of the ruling Maldivian Democratic Party (MDP) concurred with Naeem and questioned whether a two-year extension would allow the resorts to become operational.
MDP Hamid Abdul Gafoor noted that the state was owed US$320 million as unpaid rent and fines, which was “not a small amount” to be written off.
DRP MP Dr Abdulla Mausoom however argued that parliament was forced to “enter micro-governance” as a result of the current administration’s “insincerity” and “disregard of the law and doing things in the margins.”
The proposed law would ensure that the government could not impose double standards on tourist businesses, Mausoom said.