The ruling Progressive Party of the Maldives (PPM) celebrated the passage of President Abdulla Yameen’s flagship Special Economic Zone (SEZ) bill with fireworks and a music show on Friday night (August 29).
The ‘Development Certain – SEZ for the atolls’ celebration at Malé’s Alimas Carnival saw PPM MPs heap praise on President Yameen and Tourism Minister Ahmed Adeeb. MPs hailed Yameen as an economic expert and a president for the youth.
The SEZ bill “would bring unparalleled development” to the Maldives and accelerate development of the country’s rural atolls, MPs said. The SEZ bill, passed under PPM’s mantra ‘Economy, Youth, Hope,’ would usher in a prosperous future, the PPM said.
MPs also celebrated what it called a “war” against opposition Maldivian Democratic Party in passing the bill. The opposition had proposed over 180 of the 245 amendments to the bill at an extended sitting on Thursday. However, the bill passed with only six minor amendments, which had been proposed by the ruling party.
At the ceremony, Speaker Abdulla Maseeh and PPM parliamentary group leader Ahmed Nihan handed over a copy of the bill to President Yameen.
MDP contends the SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralisation system, and authorise a board formed by the president to “openly sell off the country” without parliamentary oversight.
The government, however, maintains that SEZs with relaxed regulations and tax incentives were necessary for foreign investors to choose the Maldives over other developing nations and to launch ‘mega projects,’ including the I-Havan free port in northern Haa Alif atoll.
SEZ for the atolls
Tourism Minister Ahmed Adeeb, who spearheaded the drafting of the SEZ law, said benefits and tax breaks in the legislation would attract multi-million dollar investments and will bring benefits to all citizens.
“As I stand here, I see a very prosperous future. I know, in the past two years numerous investors have come wanting to invest in the Maldives. They ask, why should we go to Haa Alif? Why should we go to Addu Atoll? What’s so special there? There are islands and lagoons near Malé, why should we invest in the Malé region, build guesthouses here? That is true, before this, the government did not have any special offers on negotiation, such as designating special economic zones. But today, we have special offers on hand,” he said.
California had competed with other American states to attract car manufacturer Toyota with free water and electricity, he said. But investors in the Maldives have to establish water, electricity, and sewerage systems before they could make investments, he said.
He went on to dismiss opposition concerns over the legislation, including the proliferation of gangs and criminal activity, he said.
“But I think gangs are being formed even now. You don’t need a law for that. That happens outside the law,” Adeeb said.
Opposition leader and former President Mohamed Nasheed had dubbed the legislation the ‘Artur Brothers bill’, referring to the infamous Armenian brothers linked with money laundering and drug trafficking who made headlines last year after they were photographed with cabinet ministers.
Economic Minister Mohamed Saeed also defended provisions that allow 40 percent of investment in any special economic zone to be in tourism or tourism related industries.
Critics have said the excessive benefits and tax breaks to tourism related investments in SEZs would allows tourism owners to legally evade taxes.
But Saeed contended all SEZs, whether it is a free port or a financial center, require a tourism component, as “the Maldives’ unique selling point is sun, sand, and sea.”
With a US$1 billion investment, only US$400 million could be invested in tourism, just enough to build 250 rooms, Saeed said.
MP Ahmed Nihan warned the opposition dominated Malé City Council that the ruling party would not hesitate to dissolve councils that are “obstructing development.
“I am informing you tonight, as leader of the progressive party’s parliamentary group, I am closely observing Malé flooding and congestion in Malé,” he said.
“We will not hesitate to dissolve councils that obstruct the government in order to provide services. Our parliamentary group in general agrees to this. We know [councils] are obstructing development.”
The Maldives is a unitary state, he said and argued public land and assets do not belong to councils, but to the government and the president or a ministry designated by the president.
Meanwhile, MP Abdulla Rifau (Bochey) said the SEZs will create jobs for unemployed youth and Kudahuvahdoo MP Ahmed Amir pledged to stop any sort of corruption in SEZs.
Speaking to the media on Thursday, Yameen said he would ratify the bill as soon as Attorney General Mohamed Anil reviews it, and start work on existing project proposals including the I-Haven project and SEZs in central Faafu and Dhaalu atolls.
“We will not wait until we get proposals. Our aim is to start work on evaluation of proposals we have already received. The government will compile the framework necessary for that under this bill. Then investors can come and start work. It will not be difficult for them to continue with their work with this bill,” he said.
President Yameen has said the SEZ law would “transform” the economy through diversification and mitigate the reliance on the tourism industry, while opposition leader Nasheed has dismissed SEZs and the touted mega projects as “castles in the air.”
Referring to the opposition to his administration’s public-private partnership projects on religious and nationalistic grounds – with opposition parties accusing the government of “selling off state assets” – Nasheed has previously argued that the current administration’s economic policies were far worse according to these standards.
Nasheed also contended that Maldivian law would not be enforced in the SEZs, claiming that gambling would be allowed in the zones.
Former coalition partner Jumhooree Party (JP) previously claimed the SEZ law would facilitate massive corruption and undermine independence, but on Wednesday announced a three-line whip in favor of the bill.
The change in the party’s stance closely follows the state’s cancellation of various business agreements made with the JP leader Gasim Ibrahim’s business Villa Enterprises.