Government’s changes to resort lease payments will cost Maldives US$135 million: MDP

The new government’s decision to allow extended resort leases to be paid in installments, rather than upfront at the end of the lease, will immediately take US$135 million of the country’s coffers, the Maldivian Democratic Party (MDP) has claimed.

New Tourism Minister Ahmed Adheeb was not responding at time of press. Former Tourism Minister Dr Mariyam Zulfa explained that Nasheed’s government had offered resorts the option of extending resort lease periods from 25 to up to 50 years.

“Under the regulations the resort lease period was extended to 50 years, with a clause that this would cost US$100,000 every year. But the regulations left open to interpretation how this was to be collected,” she said.

“The Nasheed government had requested that those resorts extending to a 50 year lease pay in a lump sum,” she said, “but while I was Tourism Minister, Gasim Ibrahim and Ahmed ‘Redwave’ Saleem kept pressuring me to let them pay on a yearly basis. They didn’t want to give any money to the government, and soon after the government changed they got what they wanted. [The installments] will only be payable at the end of the current lease periods – it is a huge loss to the treasury.”

According to the MDP, 25 parties had paid the new lease under Nasheed’s government, while a further 90 parties had signed up to extend the lease.

“Some of the resorts wanted it because it increased the value of the property, and therefore increased the value of the government’s asset,” Dr Zulfa explained. “Properties with a 50 year lease paid up front are much more attractive to investors, and encourage development.”

Dr Zulfa contended that not only did the change in policy forgo the country future earnings, “but now they’ve taken a sovereign loan of US$50 million – Tourism Minister Ahmed Adheeb was boasting about it on his Facebook page.”

“They said they need it to finance the budget shortfall – but what shortfall? There was no shortfall – not until they gave this loophole to the coup people who now won’t have to pay anything. They don’t care about the common people – infrastructure projects all over the country have stopped and contractors have been sent home. People [on the islands] are angry, upset and despairing,” Zulfa claimed.

Secretary General of the Maldives Association of Tourism Industry (MATI), ‘Sim’ Mohamed Ibrahim, said he couldn’t speculate on the impact of the decision, but said that negotiations to pay leases in advance had begun during Gayoom’s tenure as President.

“Resorts were willing to pay the government in advance for extensions of their lease,” he explained. “It was not just for development, but because it increases the value of a property and gives investors confidence. We recognized in good faith at the time that the government was in serious need of a cash injection.”

“Obviously, some people don’t agree with that. This came into effect during Nasheed’s government, which argued that if the lease was going to be paid annually, it would be renewed annually. Obviously the interpretations of the law are different.”