Tag: construction

Harbour construction project begins in Gemanafushi

The Maldives Transport and Construction Company (MTCC) has begun a 10-month harbour construction project on the island of Gemanafushi in Gaafu Alif Atoll.

The project aims to reconstruct a 304 metre long and 91 metre wide harbour in place of the old habour, which is in ruin and insufficient for use, local media reported.

President of Gemanafushi Council Asim Mohamed told local media that work on the project begun on January 24, adding that MTCC were given 10 months to complete the project.

Asim thanked president Waheed for starting the project soon after making a promise to do so on a recent visit to the island.

“When President Waheed visited this island a while ago, he promised that a new harbour would be constructed here. Within a short period of time, work on what will be one the best harbours in the Maldives has begun here.

“I thank President Waheed in my own name, as well as on behalf of the people of this island”, Asim was quoted as saying in Sun Online.

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Tourism growth slowed to less than one percent in 2012: Finance Ministry

The government’s forecast for economic growth in 2013 is 4.3 percent, following a slowdown to a projected 3.4 percent in 2012, according to an economic and fiscal outlook by the Finance Ministry introducing the state budget (Dhivehi) proposed for next year.

Tourism was especially hard hit in 2012, with growth falling from 15.8 percent in 2010 and 9.1 percent in 2011, to an expected 0.7 percent in 2012.

The original forecast for economic growth in 2012 was 5.5 percent.

An International Monetary Fund (IMF) mission said in a statement earlier this month that economic growth slowed to three and a half percent this year on the back of “depressed tourist arrivals earlier in the year and weak global conditions,” which have been “only partially offset by strong performance in construction and fisheries-related manufacturing.”

The IMF mission forecast “a modest recovery” for 2013 and beyond.

The Finance Ministry’s statement on the economic outlook for the next three years meanwhile explained that the Maldivian economy dipped into recession in 2009 following the global financial crisis in the previous year.

However, the economy rebounded with 7.1 percent growth in 2010 and 7 percent in 2011.

“While [real GDP] was projected to increase in 2012, the main cause of the economic slowdown compared to 2011 was the weakening of the tourism sector during the year,” the Finance Ministry stated.

While the tourism industry grew by 15.8 percent in 2010 and 9.1 percent in 2011, the industry’s growth in 2012 was expected to be 0.7 percent.

The two main reasons cited by the Finance Ministry for the anaemic growth were “the political turmoil the country faced in February” and a decline in the average number of nights tourists spend in the country “as a result of a decline in the average number of days a tourist spent in the Maldives.”

On average, tourism accounted for 28 percent of GDP during the past 10 years.

The main drivers of growth in 2012 were a booming construction industry and growth in manufacturing and fisheries.

Fisheries, manufacturing and construction

The volume of fish catch has been steadily declining for the past seven years. While approximately 185,000 tonnes of fish were caught in 2006, the number dropped to about 70,000 tonnes in 2011.

During the past five years, the value of the fisheries industry declined from MVR 489 million (US$31.7 million) to MVR 321 million (US$20.8 million) with a corresponding fall of 3.3 percent of the economy to 1.1 percent in 2012.

As a result of opening up the country’s Exclusive Economic Zone (EEZ), the industry’s productivity was expected to rise by 9.7 percent in 2012.

However, as fishing in the Indian Ocean was not expected to improve in coming years, the Finance Ministry has forecast the real GDP of the fisheries sector to decline by 1.3 percent in 2013.

Estimated real GDP for the manufacturing industry – fisheries products, foodstuff, furniture and cement – was meanwhile MVR 998 million (US$64.7 million) in 2012, up from MVR 850 million (US$55.1 million) the previous year.

Fisheries-related products accounted for the largest share of the manufacturing industry.

Following 19 percent growth in 2011, the construction industry was expected to have grown by 16 percent in 2012.

“The main reason for the large growth of the sector in 2011 and 2012 was the development of new resorts in 2011,” the Finance Ministry observed, adding that resort development accounted for 50 percent of construction in the Maldives.

Meanwhile, in the retail and import business sector, customs statistics for the first eight months of 2012 showed that the value of goods imported (adjusted for inflation) was 22 percent higher than the same period in 2011.

The real GDP of the business sector in 2012 was an estimated MVR 875 million (US$56.7 million).

Deficit and debt

The Finance Ministry also revealed that nominal GDP in 2011 was MVR31,447 million (US$2 billion) while the estimate for 2012 was MVR34,148 million (US$2.2 billion).

Real GDP in 2011 was MVR20,461 million (US$1.3 billion). Nominal GDP per capita in 2012 was estimated to be MVR 80,260 (US$5,206) per annum.

Real GDP measures the value of all goods and services produced in a country expressed in the prices of a base year – 2003 in the Maldives.

According to the Finance Ministry, the medium term target of the government was meanwhile reducing the fiscal deficit “to pave the way to conduct social and economic programmes” and regain the confidence of international financial institutions.

While a budget deficit of 9.7 percent was forecast 2012, the Finance Ministry said the figure was expected to reach 12.6 percent of GDP by the end of the year.

“The projected deficit in the estimated budget proposed for 2013 is 6.1 percent of GDP,” the Finance Ministry stated. “In the medium term, the budget deficit can be lowered to 1.9 percent of GDP in 2015.”

The Finance Ministry proposed MVR 1.1 billion (US$71.3 million) as foreign loans and MVR 1.1 billion (US$71.3 million) as domestic finance to plug the budget deficit in 2013.

While tax revenue from T-GST, GST and import duties collected in 2012 was lower than forecast, the Finance Ministry revealed that income from Business Profit Tax (BPT) was 80 percent higher than expected.

At the end of 2012, the government would have received MVR 1.3 billion (US$84 million) as BPT while the forecast was MVR763.6 million (US$49.5 million).

Presenting the 2013 budget to parliament on Monday, Finance Minister Abdulla Jihad said revenue forecast for 2013 was MVR 12.9 billion (US$836 million), including MVR 1.8 billion (US$116 million) expected as a result of implementing proposed revenue raising measures.

However, most of the proposed measures – such as hiking T-GST and introducing GST for telecom services – would have to be approved by parliament through amendments to the relevant laws.

More than MVR 200 million (US$12.9 million) was estimated as GST receipts from telecom services in 2013.

The Finance Ministry also revealed that the ‘total external public and public guaranteed debt’ was estimated to reach MVR 13.7 billion (US$888 million) in 2012.

Of the MVR 4.1 billion (US$330 million) of the loan assistance spent in 2012, more than 50 percent was from multilateral financial institutions and 28 percent from bilateral donors.

A total of MVR 1.9 billion (US$123 million) from loan assistance has been spent for various projects in 2012 while the rest was spent for budget support.

As of September 2012, MVR 561 million (US$36.4 million) has been received as budget support – US$16 million from the Asian Development Bank and US$20 million from a standby credit facility extended by the Indian government.

Moreover, the government spent more than MVR 1 billion (US$64.8 million) in 2011 and MVR 1.1 billion (US$71.3 million) in 2012 to service foreign debts as interest and repayments.

The figure was expected to remain the same in 2013.

In addition, the government spent MVR 660.5 million (US$42.8 million) in 2011 and MVR 2 billion (US$129.7 million) in 2012 to service domestic debts.

The figure for domestic debt was expected to decline to MVR 1.1 billion (US$71.3 million) in 2013 as payment for US$ 100 million of government bonds sold to the State Bank of India in Male’ – amounting to MVR 771 million (US$50 million) as repayment for a second tranche – has been pushed back to 2014.

Similarly, repayment of three ways and means treasury bonds to the Maldives Monetary Authority (MMA) or central bank amounting to MVR 951 million (US$61.6 million) has also been pushed back.

Government spending on loan repayment and interest payments was expected to reach MVR 3.1 billion (US$201 million) in 2012.

Including an estimated MVR 13 billion (US$843 million) in domestic debt, the total public debt is expected to reach MVR 27 billion (US$1.7 billion) in 2012 and MVR 31 billion (US$2 billion) in 2013 – 82 percent of GDP.

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Construction chief calls on government to impose occupational safety act

The relatively small number of building site deaths recorded in the Maldives in recent years is more the result of “good fortune” rather than industry commitments to safety, the head of one of the country’s most prominent construction industry bodies has warned this week.

Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), told Minivan News that he believed a lack of national regulations outlining health and safety obligations at the nation’s building sites was a major point of concern needing to be addressed. He added that despite there being “not many deaths” attributed to the Maldives construction industry, laws still needed to be passed to ensure the safety of staff.

According to Janah, when assessing the standards of occupational health and safety on the country’s construction sites there were very few places in the world that “would accept the way work is conducted here in the Maldives”.

The comments were made after the Maldives Police Service police confirmed Tuesday (June 19) that a Bangladesh national working in the capital had died from injuries sustained during a fall from the sixth floor of a building site.

Police Spokesperson Sub-Inspector Hassan Haneef said that the construction company operating the site has said that “all safety measures” has been enforced at the time of the incident. However, after police interviewed the deceased’s co-workers, Haneef said it had been alleged that no such safety measures were adopted at the site.

When questioned by Minivan News about what actions the police may look to take in relation to the incident, the police spokesperson said he could not comment further on the case while investigations were ongoing.

Regulation

While the Centre for Community Health and Diseases Control (CCHDC) is presently said to be working on drafting regulations that would impose safety standards on the industry, authorities have told Minivan News that there is presently no legal framework compelling construction workers to adopt occupational health measures.

According to MACI head Janah, this lack of regulation – as well as strong pressure for cost-cutting within the construction industry – were proving to be major setbacks in ensuring industry-wide improvements in health and safety.

“The issue of occupational health and safety has been a problem for years now. There are presently no laws encouraging construction companies to adopt safety standards in the workplace,” he said. “Clients are also not setting aside money to ensure health and safety measures are being met. People just don’t understand the importance of it in the workplace.”

Janah claimed that there were already a number of construction companies within the country acting in a responsible manner when it comes to ensuring employee safety. Yet despite the efforts of such companies to hold daily safety drills and other on-site programmes, he added that the industry’s work was being tarnished by other construction groups that were failing to meet their obligations.

“The majority of small and medium sized [construction] companies are not being paid or compensated to ensure employee safety, which makes it very difficult for them to adapt,” he added.

Janah said that MACI set out official guidelines late last year to try and ensure the organisation’s members were prioritising employee safety.  However, he conceded that these guidelines were not a substitute for regulation, calling on the government to press ahead with passing legislation on mandatory safety obligations for construction workers.

Janah said he was “very sad” at the death of the construction worker who fell to his death this week in Male’ and pointed out that it was “not the first time” a construction employee had been injured or killed working on a building site in the capital.

“The employee was not believed to be wearing any safety gear when he died. This is shocking. Fortunately there have not been many deaths in construction here,” he said. “We will only see health and safety measures being adopted though when companies are willing to pay for it. However, if there is regulation, then there are also safety standards that companies will be forced to adhere to.”

When contacted today about the potential nature of safety regulations for the construction industry, the Ministry of Human Resources Youth and Sport forwarded Minivan News to the country’s Labour Relations Authority (LRA).

The LRA’s Assistant Director, Aishath Nafa Ahmed said it had already been looking to establish a regulation that would outline occupational health requirements at construction sites in future. According to Ahmed, the LRA was presently powerless to take action against an employer found to be operating unsafe sites under existing regulation.

“We can at present go to a site and inform employers about safety, but we do not have powers to act on possible concerns,” she said. “Last year, we ourselves started on a draft regulation as well within the ministry. But I do not know whether this got completed or not.”

Ahmed added that from her understanding, the country’s CCHDC had also been working to outline an act on worker safety that was designed to try and cut down on incidents such as the construction site death seen this week.

“They did send us an outline in April about [worker safety],” she said.

High commission concerns

Among those to have expressed concern this week at the work-site death of a foreign national and wider issues of occupational safety on the country’s construction sites, the High Commission of Bangladesh in Male’ said it had “raised concerns on a regular basis” over the safety of occupational health in the country for its nationals.

High Commissioner Rear Admiral Abu Saeed Mohamed Abdul Awal said that he had been in touch with representatives in the country over trying to “ensure” that sufficient safety measures were being afforded to workers in the country.

“We have been interacting with officials at various levels here about this issue. It is an ongoing process,” he added.

“Bad employers”

Last month, Commissioner Awal said he believed workers from Bangladesh were regularly being brought to the Maldives to perform unskilled work, usually in the construction industry, alleging that upon arriving, expatriates from Bangladesh were suffering from the practices of ”bad employers”.

“This is a real problem that is happening here, there have been many raids over the last year on unskilled [expatriate] workers who are suffering because of the companies employing them. They are not being given proper salaries and are paying the price for some of these employers,” he said.

Rear Admiral Awar added that it was the responsibility of employers to ensure expatriate staff had the proper documentation, suitable living standards and safe working environments.

Concerns about the treatment of expatriates from across the South Asia region were also shared by Indian High Commissioner Dynaneshwar Mulay. Speaking to Minivan News in April, Mulay raised concerns over the general treatment of Indian expatriates in the Maldives, particularly by the country’s police and judiciary.

Mulay claimed that alongside concerns about the treatment of some Indian expatriates in relation to the law, there were significant issues relating to “basic human rights” that needed to be addressed concerning expatriates from countries including Sri Lanka and Bangladesh.

Big business

Beyond concerns about the basic human rights of foreign employees in the country, labour trafficking is also believed to represent a significant national economic issue.

An ongoing police investigation into labour trafficking in the Maldives last year uncovered an industry worth an estimated US$123 million, eclipsing fishing (US$46 million in 2007) as the second greatest contributor of foreign currency to the Maldivian economy after tourism.

The authorities’ findings echo concerns first raised by former Bangladeshi High Commissioner Dr Selina Muhsin, reported by Minivan News in August 2010. The comments by Mushin were made shortly after the country was placed on the US State Department’s Tier 2 watchlist for human trafficking.

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Bangladeshi construction worker dies after fall

A Bangladeshi expatriate construction worker has died after falling six stories in the Maafannu area of the capital Male’, local media has reported.

The fall was reported to have occurred at around 8:15AM this morning. The man was rushed to Indira Ghandi Memorial Hospital (IGMH) before succumbing to his injuries at around 11:45AM.

Police are said to be investigating the circumstances surrounding the accident.

Bangladeshi expatriates make up a significant number of workers in the Maldivian construction industry.

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Islamic Ministry bans construction work during Friday prayer time

The Ministry of Islamic Affairs have Ministry has ordered that construction not be carried out during Friday prayer time.

“We will do everything necessary to end such practices,” newly-appointed Minister of Islamic Affairs, Sheikh Mohamed Shaheem Ali Saeed was reported as saying in local media. “Working during Friday prayer time is not accepted in the Maldives. Even work carried out by non-muslims must be stopped for Friday prayers.”

The Ministry said in a statement: “We would like to remind our brothers and sisters that continuing to work during Friday prayer time is against the Quran and Sunnah.”

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“Tariff rationalisation a positive to economy”: Care Ratings Maldives

The new tariff structure that came into force on January 1, 2012 will have a positive impact on the domestic economy, predicts an economic review report for December released by Care Ratings Maldives this week.

Care Ratings Maldives became the first credit ratings agency recognised by the Capital Markets Development Authority (CMDA) in May 2011 to carry out ratings of debt instruments and facilities.

“The new export-import tariff structure may be viewed as a pragmatic policy, designed to diminish structural fragilities of the Maldivian economy,” the report found.

Amendments to the Export-Import Act proposed by the government as part of its economic reform package was passed by Parliament on November 21 and ratified by the President shortly thereafter. Import duties were subsequently reduced and scrapped entirely for a range of items.

Under the new tariff structure, the report observes, “products such as metals, minerals, chemical products and manufactured goods, which together constitute about 57 percent of total [imports], have by and large been awarded with a reduction in tariffs.”

However it noted that tariffs or import duties for certain items have been significantly hiked, such as tariffs for tobacco from 50 to 150 percent and non-biodegradable plastic bags from 200 to 400 percent.

The report also noted that the contribution of import duties to government revenue has been declining, from 73 percent in 2008 to 46 percent in the first ten months of 2011.

Meanwhile the implementation of new taxes, such as the Goods and Service Tax (GST) and Business Profit Tax (BPT), is expected to account for a higher portion of government income.

“It may be noted that the Maldivian government is making a conscious attempt at augmenting revenues from direct tax sources, rather than indirect taxes,” the report stated.

The report predicts that “the largest beneficiary of this new tariff structure” could be the secondary sector as tariffs have been lowered significantly (between 10 percent and 100 percent reduction) for inputs of the manufacturing and construction industries.

As a result, the report forecast that the contribution of both sectors to the GDP could reach pre-recession levels of five and 11 percent, respectively.

“The reduction in import tariff would impact the construction sector by freeing resources for projects under implementation and reducing their costs during gestation periods,” the report explains, adding that the construct boom “could boost the tertiary sector of the economy as well.”

Retailers meanwhile expect prices of foodstuff to fall in the wake of the import duty waiver. Items with GST rate set at zero percent for which import duties have now been scrapped include rice, flour, sugar, salt, milk, cooking oil, eggs, tea, fish products, onions, potatoes, fruits and vegetables, baby food, diapers, gas, diesel and petrol.

While the State Trading Organisation (STO) announced a reduction in diesel and petrol prices, Maldivian airline reduced airfares for domestic flights by Rf50 in line with the reduction in import duty for jet fuel.

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Parking garages to relieve Male’ congestion

Four parking buildings for motorcycles and cars are to be built on Male to relieve congestion, said Galolhu-South councillor Ibrahim Shujau. Work is said to begin soon.

The council allegedly discussed erecting one parking garage at the now-vacant parking lot Maafannu Laamige, west of Theemuge, reports Haveeru.

The locations of the other three buildings require the National Planning Council’s permission.

Shujau told local media that the council plans to charge a parking fee for both cars and motorcycles. He added that the parking garages would make streets more comfortable for pedestrians and drivers.

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Tourism sails on with luxury in fragile setting

Maldives tourism has made an impressive comeback since the 2009 global recession, and investment from China and India is expected to surpass precedents in coming years, finds a report from Care Ratings Maldives.

Nonetheless, the Maldives occupies a precarious market, and government controls limit foreign investment, the ratings agency found.

In 2005 Asia surpassed America as a tourist destination, coming in second to Europe. According to Care Ratings, Foreign Tourist Arrivals (FTA) surged this year as China’s economy flourished and European economies made a slow comeback. Chinese tourists are projected to account for 15 percent of Maldives FTA by 2020.

Plans are being made to expand capacity accordingly. The Maldives tourism sector will add 77 new resorts and increase bed capacity by 47 percent over the next three years, the report finds. Additional safari vessels are also expected to be added to the industry, which already boasts a fleet 150 strong.

By the end of 2011, the report projects the direct employments in tourism will have grown from 35,000 to 38,000. Fifty percent of these are likely to be expatriate hires.

Revenues are also expected to increase by 10 percent by the end of the year, claims the report.

Tourism is the largest contributor to Maldives national GDP and foreign currency, however the sector is restricted and vulnerable. The reports lists terrorism, global economic crisis, and limited land and human resources as obstacles to growth. It also points out that environment is a major factor of success.

“The tourism industry is capital-intensive in nature due to the high cost involved in leasing the land, developing the land and constructing a self-contained tourist resort,” states the report. Maldivian resorts frequently sell the appeal of the natural environments, but the Maldivian construction industry lacks the capacity to process raw materials.

Importing processed materials drives the average resort room construction cost up to US$30,000 to US$60,000, one of several factors which makes tourism in the Maldives a high-end market.

Human capital is mentioned as a complicating factor. Resort employment could account for one-tenth of the Maldivian population, 32 percent of which is unemployed. However, only half of resort employees are Maldivian.

Coincidentally, a recent study found that social stigma limited female Maldivian employment in the resort sector to 3 percent, a number far below the demographic’s potential.

Another challenge to growth is government oversight. “The industry now is very much regulated by the government of the Maldives,” states the report. “Tourism is now developed and managed according to country-wide policy based on a master plan.”

All Maldivian islands are government-owned, and resorts can only be leased for 25 to 50 years. Construction is limited by the “One Island One Resort” policy, which allows only one resort per island, and structures are limited to 20 percent of the land available.

Over the past three decades, the ministry has introduced three tourism master plans.

Although the report recognizes the complicating effect of government restrictions on developers and investors, it states attributes these plans with significant growth.

“The growth of the industry in the last couple of decades was mainly due to the efforts taken by the government to promote the tourism industry and the progress was largely on a planned path determined by the First Tourism Master Plan (1983-1992), the Second Tourism Master Plan (1996-2005) and the Third Tourism Master Plan (2007-2011).”

The Maldivian government also created the Maldives Marketing and Public Relations Corporation (MMPRC), which promotes the Maldives as a brand in the world tourism arena.

Last week, MMPRC recognized the value of the Asian travel market by co-hosting a travel agents networking event with GMR. In a nod to the region’s booming business culture, MMPRC MD Simon Hawkins pointed out the advantages of hosting meetings at Maldives resorts.

MMPRC aims to draw 1 million tourists to the Maldives by the end of 2012.This year, the Maldives reached 700,000 arrivals by September.

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151 MTCC employees face last two weeks of employment

A financial crisis at Maldives Transport and Contracting Company (MTCC) will leave 151 workers unemployed by the end of this month following an “organisational restructure”, reports Haveeru.

Chief Executive Officer Hussein Amr said departments would be reshuffled, Haveeru reports. Amr allegedly asked all employees to be cooperative during the transition.

A company spokesperson confirmed the report with Haveeru but was said to be unaware of the exact number of employees who can expect to be laid off.

He said the lay-offs are meant to improve the company’s efficiency.

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