Tourism Act not business friendly, says MATI

Tourism dollars have taken the Maldives to the verge of leaving ‘Least Developed Country’ status.

Life expectancy has increased by thirty years in the three decades since the first resort opened, and the Maldives has the highest GDP per capita in South Asia.

So Mohamed Sim Ibrahim, the Secretary General of the Maldives Association of Tourism Industry (MATI), might be expected to be a happy man.

In fact he has overseen the transformation of MATI from a trade association to a powerful lobby group, increasingly opposed to government policy.

In an interview with Minivan News he explains why the tourism industry isn’t growing, and how government mismanagement is threatening to kill the goose that laid the golden egg.

Serious Concerns

The government constantly highlights record occupancy levels. But the truth is the tourism industry is not growing. Demand is outstripping supply and “there must be growth in terms of capacity, more resorts”, Sim begins.

“In 2005 the government auctioned licenses to build resorts on eleven islands, with the slogan ‘a resort in every atoll.’”

Tourism wealth was to spread to the neglected southern atolls and raise living standards.

“But there are serious concerns about whether this will happen,” Sim says.

“Of the eleven resorts promised in 2005, only one has opened. In the meantime, the government is losing revenue from bed tax, and the people are missing out on jobs.”

Blind Auctions

MATI will celebrate its twenty fifth anniversary this month. But it only became an active lobbying organisation, focused on legislative reform, after the Tourism Act in 1999.

The Tourism Act is not business friendly, says Sim bluntly. “The bidding system is the problem.”

“The right to develop a resort is given to the individual or company which promises the government the highest annual rent, in a blind auction.”

“People are encouraged to promise unrealistic rent levels,” according to SIM. “And when the banks see the business plans, they don’t offer finance. Lacking finance, resorts are left unbuilt.”

Some islands auctioned in the 90s have still not been developed into resorts because of this pattern, Sim says.

Reform

Tourism generates two thirds of the Maldives’ foreign currency, ninety percent of government tax revenue and accounts for over half of all employment.

But government ‘short-termism’ is threatening “to kill the goose that laid the golden egg”, Sim says. And MATI is campaigning for three business friendly reforms.

It wants leases to be extended to fifty years. And with leases on the first resorts built in the 1970s about to run out, MATI also says owners to be compensated if they lose resorts.

Most importantly the government must move away from the current bidding process.

“To expand, we need to encourage charter tourists. For this we need lower rents. And owners need the greatest possible flexibility to develop their product,” Sim says.

“MATI’s argument is simple. The interests of the tourism industry and the interests of the country are one and the same thing. Tourism is the biggest, if not the only game in town.”

Trickle Down

But it is hard for some Maldivians to stomach MATI’s complaints. Sim talks to me across a polished boardroom table, with photos of the country’s richest men looking over our heads to the ocean view beyond.

MATI Chairman Mohamed Ummar Maniku, and vice chairs Gasim Ibrahm and Hussain (Champa) Afeef between them own over half of the country’s resorts and are thought to be dollar billionaires.

“There is no way of getting away from it, the big groups own most of the resorts,” Sim concedes.

But MATI is in the business of protecting the rights of everyone associated with the tourism industry, he promises.

Sim speaks confidently of the trickle down of tourist wealth.

“The newly created Maldives Tourism Development Company (MTDC) is fantastic. With shares for as little as Rf500, we can have the man sweeping the beach as a shareholder.”

Tourism accounts for 80 percent of GDP, when you consider multiplier industries, such as shipping and construction, Sim says. And, based on a figure of eight dependents per Maldivian male, he estimates each resort supports around twenty-five thousand people.

Ownership And Opportunity

But for most Maldivians unskilled resort jobs remain the horizon of tourism. What about resort ownership and career opportunities for Maldivians?

“It is not right to say Maldivians don’t have opportunities in the industry,” Sim says.

The statistics are surprising. 80 percent of resort managers are Maldivians and 90 percent of assistant managers, Sim claims.

“All the senior executives of Gasim’s Villa Group, and all but one at Mr Maniku’s Universal Group are Maldivians.”

And again Sim says the government is to blame if more Maldivians are not in senior positions.

“It takes time to train Maldivians to fill top positions. But the government has not paid enough attention to the state-run hotel school,” he laments.

“It does not provide equivalent training to Malaysia, where many Maldivian executives studied on scholarships.”

The government attitude seems to be: resorts do everything else for themselves, so why can’t they train their staff too?

Influence?

So why then do Maldivians feel tourism wealth is concentrated in the hands of the few, in particular the few on MATI’s board?

“If the fruits of tourism are not being spread equitably, there’s very little we can do,” Sim says. “The Finance Minister draws up the budget and parliament votes for it.”

Sim’s argument seems incongruous. The Finance Minister is MATI vice chair Gasim Ibrahim. And Champa Afeef, and (until recently) MU Maniku, are economic advisors to the President.

“Gasim has only been Finance Minister for one year,” Sim reminds me.

While of Champa and Maniku’s positions, he cryptically offers, perhaps their influence is not as great as perceived.

Business Not Politics

Maniku left his role as economic advisor in June after a long alliance with President Gayoom and has refused to publicly explain why.

Business leaders suggest the parting of ways was due to Gayoom’s decision to build a port on Hulhumale, a reclaimed island to the north of the capital Male, to the possible detriment of nearby resorts, including Maniku’s first, Kurumba.

Sim refuses to be drawn on Maniku’s resignation. But he implies the business leaders who head MATI could do a better job of running the economy than politicians.

Gesturing towards the framed photos of MATI’s big three, he says, “If these people had their way, there would be workable, business friendly regulation.”

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