“The MDP is extremely worried about the deteriorating environment for investors and strongly condemns the continued threats posed by Dr Waheed’s administration to foreign investors,” read a press statement released by the party today.
The party’s spokesman, Hamid Abdul Ghafoor, stated that public-private partnerships (PPP) initiated under the MDP government have been suspended “in the interest of preserving the status and wealth of few local wealthy businessmen.”
The current government announced the suspension of any new PPP projects shortly after assuming power. The Minister of Economic Development, Ahmed Mohamed, whose department handles foreign investment in the Maldives, was not responding at the time of press. President’s Office Spokesperson Abbas Adil Riza was also not responding.
The MDP statement specifically mentions three projects which have encountered difficulties, claiming that they have been intentionally hindered by the current government, “causing irreparable damage to the foreign investment climate of Maldives.”
The World Bank’s ‘Ease of Doing Business Report’ shows that the Maldives has dropped one place in its overall list during the last twelve months, falling to 79th out of 183 countries ranked. In terms of protecting investors, the Maldives dropped five places in this year’s list.
Former Energy Advisor to President Nasheed Mike Mason told Minivan News in June that, before Nasheed’s controversial resignation, the World Bank had given verbal approval to a plan which would have brought an immediate US$200million of renewable energy investment to the country.
The resulting political instability caused the plan, which had been intended to wean the country off its dependency on oil imports, suspended indefinitely as potential investors backed away.
Meanwhile, proposed austerity measures sent to Parliament by the Finance Ministry last week include a three percent increase in oil import duty.
One of the most high profile foreign investments in the Maldives is the GMR-MAHB project to develop Ibrahim Nasir International Airport (INIA). This US$400 million deal for the upgrade and management of the airport represents the country’s biggest ever private investment contract.
The deal has foundered on a dispute over the implementation of an Airport Development Charge (ADC) of $25 per passenger which was agreed as part of the initial contract. This charge was opposed by the Dhivehi Qaumee Party (DQP), now a member of the coalition government, whilst in opposition. The party last year successfully sued for the blocking of the ADC, claiming that it represented an unauthorised tax.
The case led to an arrangement with the Mohamed Nasheed administration whereby the ADC money would be deducted from the concession fee payable to the government. The subsequent shortfall in funding for the project has seen the government’s anticipated US$14.3million in fees replaced this quarter with a bill from GMR for US$1.5million.
A number of pro-government parties, including the DQP, have renewed calls for the re-nationalisation of the airport. The dispute has now been referred to a court of arbitration in Singapore.
All three projects mentioned in today’s press release involve partnerships with Indian firms, the other two being a social housing development project with the TATA group, and a solid waste management project in Thilafushi with environmental engineering company UPL.
During President Dr Mohamed Waheed Hassan’s official state visit to India in May, he confirmed that all contracts with Indian investors would be honoured and was keen to discuss further Indian investment projects in the Maldives.
The MDP statement noted that its PPP projects would have generated revenue over MVR23.1billion (US$1.5billion) for the country.
The Finance Ministry’s austerity measures are an attempt to reduce this year’s budget deficit, which is forecast to reach MVR9.1billion (US$590million).