President Abdulla Yameen has appointed Tourism Minister Ahmed Adeeb as the chairman of the board of investment created last week under the Special Economic Zone (SEZ) Act.
Along with Economic Development Minister Mohamed Saeed as vice chairman, the rest of the members are Fisheries and Agriculture Minister Dr Mohamed Shainee, Environment and Energy Minister Thoriq Ibrahim, and Youth and Sports Minister Mohamed Maleeh Jamal.
The five-member board is authorised to grant approval for applications by developers to establish a zone, issue permits and investment licenses, and formulate rules and policies for the operation of SEZs.
Additionally, the board would monitor and review progress of investments, assess risk damage and liability, determine rates of fees and charges, and sign investment agreements between the government and developers.
The board would be assisted by a 17-member technical committee comprised of government officials as well as representatives from the private sector.
Following criticism from the opposition over the appointment of ministers to the board – who contended it was unconstitutional – President’s Office Spokesperson Ibrahim Muaz Ali put out a press statement yesterday (September 6) insisting that the board was instituted in line with laws and regulations.
Article 136(a) of the Constitution states, “A member of the cabinet shall not hold any other public office or office of profit, actively engage in a business or in the practice of any profession, or any other income generating employment, be employed by any person, buy or lease any property belonging to the state, or have a financial interest in any transaction between the state and another party.”
However, unlike boards of state-owned enterprises, Muaz stressed that the ministers on the board would not receive any form of remuneration, noting that it was “a governing board”.
“Therefore, the Maldivian government condemns misleading statements from some politicians made for different political purposes concerning the president forming the board of investment and appointing members,” read the press release.
Under the SEZ Act, each zone would be granted to a developer – following evaluation of a proposal – to take overall responsibility for management and operation. Once a permit is granted, finding and choosing investors is left to the developer.
The investor would then be issued a license once the developer submits its agreement with the investor to the board.
The investment agreement signed between the board and the developer would include details of the investment, its value, proposed business activities, details of incentives, compensation formula, dispute resolution mechanisms, rights and obligations of the developer, as well as other terms and conditions.
Speaking at a forum on state broadcaster Television Maldives (TVM) last week, Adeeb said the SEZ law allows the government to offer incentives and “for the first time” negotiate directly with investors, who preferred “a one-stop solution” for applications, permits and licenses.
While US$5 billion has been invested in tourism since 1972, Adeeb suggested that even if one ‘mega project’ such as iHavan “takes off” with more than US$1 billion worth of investment, the economy would be transformed.
The iHavan or ‘Ihavandhippolhu Integrated Development Project’ envisions an international shipping and commercial hub with a container transhipment port, bulk-breaking and warehousing, oil storage and bunkering facilities, an international airport, a cruise liner terminal, a yacht marina, real estate development and ‘vertical’ tourism services.
The project aims to take advantage of the strategic location of the Maldives’ northernmost atoll on a major shipping route – through which more than 700,000 ships carry goods worth US$18 trillion a year – and develop 5,700 hectares of land along with deep natural harbours.
Opposition leader Mohamed Nasheed has, however, dismissed SEZs and the touted mega projects as “castles in the air” whilst his Maldivian Democratic Party (MDP) has warned that the law would pave the way for money laundering and other criminal enterprises, undermine local councils, and authorise the president to “openly sell off the country” without parliamentary oversight.
Speaking at the forum, MDP MP Fayyaz Ismail said large investments could not be secured while foreign businesses did not have confidence in the judiciary.
Fayyaz argued that the SEZ law lacked provisions for oversight and adequate legal protection for investors as well as controls for the inflow and outflow of money, relying solely on the benevolence and integrity of the government.
Addressing allegations concerning criminal enterprises and gambling in SEZs, Adeeb referred to President Yameen’s assurance that investments would not pose a threat to either Islam or Maldivian sovereignty.
“We don’t sell our daughters or women, do we? A clean tourism has been introduced in the Maldives without any prostitution,” he said.
If sound policies to favour local contractors and create jobs for youth are implemented, Adeeb suggested that investors could be brought in while “protecting our religion and traditions.”
“I don’t think gangs or black money are created by a law. It is done outside the law,” he said.