Tag: economy

Government doubles third quarter income

The Maldives government has almost doubled state income for the third quarter of 2011, increasing revenue 92 percent on the same quarter last year, according to the Maldives Inland Revenue Authority (MIRA).

Total dollar income for the period, according to MIRA, was US$60.5 million, made up largely of tourism lease payments (31.7 percent) and income from the 3.5 percent Tourism Goods and Services Tax (19.3 percent, or US$11.6 million). That tax is set to increase to six percent next year.

Total state income stands at Rf 3.4 billion for the year so far (US$220 million), according to MIRA.

Presenting the 2012 budget to parliament this week, Finance Minister Ahmed Inaz predicted that altogether, government income was expected to reach a record Rf 9 billion (US$583 million) this year.

Total expenditure out of the 2012 state budget is estimated to be Rf14.6 billion (US$946.8 million), an 18 percent increase from 2011. However the Inaz highlighted that recurrent expenditure was in line with income for the first time in many years, and the deficit was expected to drop to single figures.

Based on current estimates for 2011 the Maldives had recorded economic growth of 7.5 percent, Inaz said, an improvement of 5.6 percent in 2010. Growth was aided by a 21 percent tourism arrivals – the Maldives expects to welcome its millionth visitor for the year.

The introduction of the TGST was particularly significant in 2011 as it revealed that the government had been substantially underestimating the size of the tourism economy, which based on TGST receipts was actually three times larger than previously imagined.

Registration and collection has also gone surprisingly smoothly. Speaking to Minivan News in May, Inaz remarked on willingness of tourism businesses of all sizes to declare and pay the tax.
“The TSGT is being taken from big resorts as well as small guest houses on remote islands – very small businesses. They declare – amazingly, they declare,” he noted.
However despite the large influx of foreign currency into the tourism sector the Maldivian economy remains subject to a ongoing dollar shortage, with most people unable to exchange rufiya into dollars at the official rate of Rf 15.42.

Inaz expressed concern that 47 percent of transactions in the domestic economy were made through other currencies – almost all resorts charge in dollars and bank overseas – and called on the Maldives Monetary Authority (MMA) as the country’s central bank to take measures to enforce the use of rufiya as legal tender.

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Parliament passes bill reducing, eliminating import duties

Parliament today passed a bill proposed by the government under its economic reform package to amend the Export-Import Act of 1979 to reduce and eliminate import duties for a wide range of goods.

The amendment bill was passed today with unanimous consent of 60 MPs present and voting.

Among the items for which custom duties would be eliminated include construction material, foodstuffs, agricultural equipment, medical devices, passenger vessels and goods used for tourism services.

However, the bill was passed with an amendment to charge a Rf10,000 (US$650) annual fee for passenger vessels and no change to tariffs for spare parts. While import duties were eliminated for construction material such as cement, glass, tin, aluminium, plywood and plastic fittings, an import duty of five percent will be levied on tiles, which was reduced from the previous 25 percent.

Import duty was reduced to five percent for furniture, beds and pillows as well as cooking items made from base metals. Other kitchen utensils had duties reduced to 10 percent.

While import duties were eliminated for most fruits and vegetables, 15 percent would still be levied on bananas, papaya, watermelon and mangoes as a protectionist measure for local agriculture. Areca-nuts would have duty reduced from 25 percent to 15 percent.

Import duties for tobacco would be hiked from 50 percent to 150 percent. However an amendment proposed by the government to raise import duties for alcohol and pork from 30 to 70 percent was defeated at committee stage.

A total of Rf2.4 billion was projected as income from import duties in the 2011 budget. With the passage of the amendment bill today and ratification by the President, the figure is expected to decline to Rf1.8 billion next year. The shortfall is to be covered by Rf2 billion in tourism goods and services tax (T-GST) and Rf 1 billion as general goods and services tax (G-GST) revenue.

MDP parliamentary group leader MP Ibrahim Mohamed Solih was not responding to calls at the time of press.

PPM Media Coordinator and Vili-Maafanu MP Ahmed Nihan told Minivan News today that all members of the party’s parliamentary group voted in favour of the bill and stressed the importance of “providing relief to businesses” paying GST on top of custom duties.

“By this vote today, we have answered the MDP’s allegations that we tried to stop Majlis sittings to prevent this bill from being passed,” he said.

Speaker Abdulla Shahid and the ruling party should bear full responsibility for the cancellation of nine sittings over three weeks, Nihan said, as the dispute over the convicted Kaashidhoo MP’s attendance could have been avoided.

The PPM council member condemned the ruling party’s “efforts to blame the Majlis cancellation on opposition parties.”

“PPM will support any measure that will provide relief to the public,” he said, adding that the party would “very closely monitor” pricing by retailers following the elimination of import duties.

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Stigma against female employment in resorts confused, workers say

The stigma against female employment in resorts presents challenges for reducing the 32 percent unemployment rate, over two-thirds of which is accounted for by women.

Sources familiar with the issue, however, claim that the stigma is “fueled by misinformation and fear”.

A recent report from Sweden’s Lund University claimed that community perceptions of resort life as ‘western’ and offensive to Islam are giving the industry a negative reputation, and are preventing women from pursuing employment in the Maldives’ most lucrative sector.

Ima* recently spoke to Minivan News about her employment in the resort sector. She was one of the first Maldivian females to be hired at a resort ten years ago, and previously lived on a local island.

“It’s very much like a family,” she said. “I know of hardly any issues with harassment from guys, people look out for each other.”

By contrast, several women working in Male’ told Minivan News that they often face sexual discrimination and harassment in the workplace. One source said there is no support against such treatment.

According to Maldivian Democratic Party (MDP) MP Eva Abdulla, “I don’t know if we have made it comfortable for women to talk to each other here.”

The thesis, “Women in Tourism: Challenges of Including Women in the Maldivian Resort Sector” was prepared by Eva Alm and Susanna Johansson during their five-month stay in the Maldives in 2010. Their findings identify “culture, religion, and women’s role in the family, the role of the family, safety, geographical spread, transportation, education and awareness” as obstacles to female employment in resorts.

Parents play a significant role in a woman’s professional future. “In the Maldives, in our religion, we are not allowed to drink or be with just any guys and things like that. So our parents are scared about that,” said one young woman quoted in the thesis.

According to the thesis, resorts are widely believed to be threatening to traditional Muslim values. At the same time, growing religious fundamentalism is projected to prevent women from participating in the local economy.

Dhivehi Rayyithunge Party (DRP) MP Rozaina Adam said a rise in fundamentalism would be an economic setback: “Instead of working, women will be lying around. That is not constructive for a growing economy and country.”

Tourism directly accounts for 30 percent of the Maldives’ GDP, and for 70 percent indirectly. Maldivian women account for a mere three percent of resort employees.

Ima said most community anxiety is due to a lack of information.

“When I go home and tell people that I work at a resort, their first perception is that I must be a good cook. But you know, they also don’t have a good idea of what my job title means. And I think that that’s a big reason behind the misperceptions in many Maldivian island communities. Many people have never been to a resort, if there was more interaction then they would understand what the resort lifestyle is. As it is, most just can’t relate to the kind of work we do here.”

One resort manager quoted in the thesis said awareness is a major challenge to promoting female employment. “Convincing the parents is difficult. They are very possessive of the girls. The parent’s perception is that they will mix with the European culture and do bad things such as drinking alcohol.”

The Maldives has one of the world’s highest divorce rates, and girls often drop out of school and get married in their late teens. Aspiration rates among youth ages 17 to 25 were recently calculated at six percent.

These statistics do not refer to the resort community.

Ima says resort life has significant benefits. “For local islanders, it can be an easy transition to resort life. Many people leave home to live or work in Male’. I think that that’s much more dangerous than working at a resort. At a resort, the lifestyle is much healthier, safer, and there is more opportunity to save.”

A source familiar with the issue told Minivan News that saving is not common for Maldivian women. She gave the example of a cleaning lady who was proud that her daughter gave her entire salary as a family contribution. “I know you want to respect your family, but how can a woman save up for herself? What option does she have for herself?” she said.

The Maldives was recently criticised for lagging behind other countries in gender equality, as defined by the Millennium Development Goals (MDGs). At the UNDP’s Democracy Day ceremony earlier this month, advisor Ferdinand von Habsburg-Lothringen warned that with only half of the Maldives’ work force engaged in the economy, “growth would not flourish.”

Several resorts have tried to accommodate social preferences by outsourcing tasks to local islands and providing daily transportation so Maldivian women do not have to live away from home.

Ima said that at the end of the day, success depends on the individual’s self confidence.

“The way you perceive colleagues and portray yourself matters for anybody, male or female. It’s about how you value yourself and the beliefs you hold. If you can stick to that, and show people who you are and how to respect you, then you can succeed,” she said.

*Name changed on request

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Q&A: UN Ambassador Abdul Ghafoor Mohamed

Abdul Ghafoor Mohamed is the Maldives Ambassador to the UN and was defacto non-resident Ambassador to the US, prior to the recent appointment of Ahmed Sareer to the position. He speaks to Minivan News about the Maldives-US relationship, climate politics and the challenges facing the country with the introduction of new interpretations of religion.

JJ Robinson: Why do you think countries such as the US and UK are interested in the Maldives considering it is such a small and remote nation?

Abdul Ghafoor Mohamed: Right now small states make up a substantial part of the international community and they have a loud voice. They not willing to sit back and take what comes, they are making their presence known and making waves, trying to assert their rights as they become more confident.

As they become more experienced in international affairs, they are becoming a much bigger presence than before. Sometimes small states are also able to act in ways larger, more powerful states are unable – other countries are much more wary of positions taken by larger states.

Small states have the opportunity to speak more openly and frankly on issues in an objective manner. I think when our views are consistent, eventually the international community does recognise that here is a country that does its homework and tries to be responsible within the resource constraints it has.

In particular the Maldives has undergone tremendous changes in the last few years; changes that present a symbol of hope for many other countries. The Maldives is a small island Muslim country, with relations with the Commonwealth and a wide range of membership which helps it have access to a large pool of friends, and the views of countries. It is also a founding member of SAARC, and although the Maldives and Bhutan are the smallest SAARC states, both played an important role in shaping its direction, especially this year as we take up the chairmanship.

Here’s a country that has had no political parties in its entire history. It went from an autocratic monarchy to an autocratic presidency. Although we moved from a sultanate, it was in some ways a change in name rather than a change in psyche, for the people and those in government.

Consequently it was a very difficult change to multiparty democracy, with new novel concepts such as independent institutions, and a President more constrained than the heads of governments we are used to having.

Yet despite the turmoil, I think the Maldives has showed that through dialogue and robust engagement, you can change a government through the ballot box. It is a credit to both the former President and the serving President that they were able to manage the transition so smoothly, given the potential for disruption.

JJ: Do you hold to the view that the Maldives is in some ways two years ahead of the current turmoil in the Middle East, and could perhaps set an example for some of these countries?

AGM: Yes and no. Yes in the sense that there are certain similarities: it was the ordinary people, and not just the poor and uncared for. It was the educated middle class and youth who took the lead in bringing the changes to the Maldives. And they demanded their rights on the streets.

But the Middle East is large and the countries complex, and a lot more people have vested interests in what happens there. We should note the success of the Maldives, in part because of the support and encouragement the international community gave to it. I’m not saying they interfered, but they certainly encouraged a democratic transition. They were engaged with both the government and the opposition, and keen to ensure the unrest did not become too costly, as a country that is dependent so much on tourism – peace and stability are important to the Maldives.

There are certainly things that can be learned from the Maldives’ experience. One of the things is the fast pace at which we moved, which made it very difficult to complete the institutions in time. Most people need time to adjust to the new thinking and new concepts.

In the Maldives we are lucky to have a homogenous religion and race, whereas in many Middle Eastern countries you have tribes and different religious and racial backgrounds. For them to come together to make sure a new political framework protects all the interests of this people may by more challenging than in the Maldives.

JJ: Since the Maldives joined the UN Human Rights Council, have you observed a difference in the way in which the Maldives is regarded and its diplomatic position?

AGM: The Maldives has always been fairly well received. We have good standing as a country run quite stably and with good development. Whatever problems we have had we have kept to ourselves.

The fact that we moved in 30-40 years from one of the least developed 16 countries to being a graduated non-LDC (least developed country) by end of first decade of the 21st century, means not only we but the last government achieved some things quite well.

The new government has taken a much more active position and is willing to be engaged with the international community even on issues of controversy, speaking its mind quite frankly.

This is the first time ever the Maldives is holding a position of this nature in the international arena. We have never been a member of a UN institution. We came in with a lot of good will because of our established record of engagement and a record of openness and transparency. We are one of the few countries which has a standing invitation to special rapporteurs.

We are also one of the few small countries – and a Muslim country – with a permanent presence in Geneva. As there are often misunderstandings about human rights instruments and values by the West and Muslim countries, many saw us, and we certainly promote ourselves, as a country that can provide a bridge for these views, as well as provide a voice for smaller states on the Council.

JJ: A US State Department cable leaked by Wikileaks documents your meeting with the State Department in February 2010. During the meeting, Assistant Secretary of State Robert Blake asks if the Maldives required “quiet US assistance” to take up the Human Rights Council position. Was that offer taken up, and what was the extent of US support for the Maldives in entering the Human Rights Council?

AGM: As a small country we didn’t have resources to run an election campaign in the way larger countries can run. Our record is of making ourselves heard and meeting as many ambassadors as possible, letter writing campaigns, and using our embassies in other parts of the world. Ministers also made contact at any international meetings.

Our campaign went on at a persistent and consistent level that didn’t cost us, because we didn’t have any money. We were obviously happy with the support that anyone extended to us, be it the US, UK or Canada. Most Western countries saw us as a moderate country that could play a constructive role.

While we appreciated the offer of help we were very keen to ensure than nobody viewed the Maldives as being sponsored. It was a conscious decision by the government because we felt we had a constructive role to play. We got 185 votes – the maximum number we could get.

JJ: The Maldives was running against Iran?

AGM: We were not running against Iran at the later stage, as they graciously withdrew and made way for the Maldives to run the race uncontested. We appreciated that, because while we were trying to win we didn’t want anyone to feel we were running against a particular country. We felt we had a strong case in running for the election in 2010, because this was the first time the Maldives had run for a position on a UN body.

There are very few small nations in Geneva who can be in the council. We had a history of positive engagement, and we wanted to use our membership in the council to improve the human rights situation at home as well.

Locally, not everyone agrees with some of the concepts. Either they are misunderstood, or seen as threatening. Our membership on the Human Rights Council also makes it easier for us to lobby the domestic community.

JJ: Later in the leaked document, Special Envoy to facilitate the closing of the Guantanamo Bay detention camp offered the Maldives US$85,000 for the resettlement of a Guantanamo detainee.

AGM: This was at an informal level to see the possibility. With regard to the money offered to the government of the Maldives, this was to help the person settle in the Maldives, and for his upkeep. This was not prize money. Obviously housing a person in the Maldives, giving him a place to stay, trying to find him an employment opportunity – that is a cost, and obviously one the Maldives should not have to pay as we are doing a favour for the US.

JJ: What ultimately happened? Did the Maldives take the US up on that offer?

AGM: The matter became quite a stir in the country, and it later died down. To my knowledge there was been no transfer of prisoners from Guantanamo to the Maldives.

JJ: You also discussed the possibility of the US putting down US$50 million in climate change assistance, which the UK’s Guardian newspaper interpreted as in return for taking a particular position at the Copenhagen climate summit.

AGM: The Maldives was one of the few small countries that supported the Copenhagen Accord, because we felt that accepting Copenhagen was more helpful than not accepting it.

We also felt that if more states came on board, the likelihood that the commitments that were given would become reality much quicker. The government did try to encourage other small states to come on board. It was a catch 22 situation – some small countries wanted to wait and see commitments become reality.

The US felt that unless there were enough people committed to the Copenhagen Accord, it would be difficult to make money available. They have to sell the commitments to their people and Congress as well.

I remember the conversation. I said that if the US were to be more forthcoming with their commitments and put the money in, it may actually encourage small states to come on more quickly, because they would see there was value in taking on the Copenhagen Accord. It wasn’t just the Maldives – I was keen to see commitments available for small states, which would mean other small states would also benefit.

Even before my meeting with the State Department the President had written to many heads of state to try and encourage them to come on board. The Maldives sent its letter of acceptance of the accord immediately after the meeting.

Unfortunately there were allegations, but I can certainly say no money was exchanged for votes.

JJ: Did the US$50 million in climate assistance ever materialise?

AGM: I believe are a number of climate-related projects with which the US is now helping.

JJ: Do you think the Maldives’ international human rights agenda at times conflicts not only with the understanding of human rights here, but also the constitution?

AGM: I wouldn’t say conflicts. But I think there are various interpretations between those who are liberal and conservative in their interpretations. But it would be wrong to say a conflict as such. I think through dialogue and discussion we can find a common ground where human rights are universal.

JJ: This topic came up during your discussion with the US State Department – you mentioned the need for greater access in the Maldives to “Western liberal education” to counter some of the extremist views coming back from places such as Pakistan.

AGM: Again, different people interpreted the comment differently. Some people interpret it as though I was trying to stop Maldivian students from traveling to places like Egypt to study. I was not – the point I was making was that many of the educational opportunities we get are in the Middle East, and sometimes for free – especially in Pakistan, where the madrassas offer free education.

Given the limited resources many parents have, it is very appealing to send children, especially sons, to these places that offer free education – in religion. The Maldives has traditionally been a very religious country. There is a love of religion and a very strong identity held about being Muslim.

When they have an opportunity for free education in Islam, many parents send their children. We have also relied on scholarships from other countries to educate children in higher studies. The more we receive these from Western countries, the more children will come back and have an influence on society. Many leading public figures have been educated abroad.

The US was one of the prime sponsors of Maldivians some time back in the 80s – we had 50 plus students in the American University of Beirut in Lebanon. Some of the best and brightest of that generation were educated in Beirut.

So we are trying to encourage especially the US to grant more scholarships for Maldivian students. It is an expensive place to study, especially for undergraduates. We felt quite keenly the loss of opportunities in Beirut. We looked to revive such opportunities.

JJ: People talk here about views from overseas being brought back to the Maldives. To what extent do you think that the Arab or Saudi interpretations of religion have been brought to the Maldives in this way, and to what extent have they supplanted traditional Maldivian interpretations of Islam?

AGM: This is my own very personal opinion: our earliest scholars studied at Azhar University in Egypt, and they were highly regarded [back in the Maldives]. There is a strong connection between religion taught in Azhar university, and religion practiced in the Maldives.

The one book that taught religion to a generation of Maldivians was a religious book by Mohamed Jameel, the father of the former Foreign Minister Fathulla Jameel. He was known as the teacher of a generation in terms of educating the public in religion.

That was the basis. These days, with the advent of modern communications and transport, we have many people coming from many schools. Even in the Middle East you have many ways of teaching and practicing religion, from the Gulf states to the more conservative Saudi Arabia. When they come back, they bring their own views of Islam, and how they have been taught.

In some ways this is unfortunate in a society that has had a very strong accord with religion. People are coming back with different religious experiences, and when they try to practice it here it sows discord. We have always seen religion as a force that bound the people of Maldives together as one, we are now seeing it as a source of discord. And that is a pity.

We hope that rather than stick to dogmatic views, we will be able to stick to a point of view that brings us together as one. The more you study the more you become aware of the complexities – whereas when you have only the basics, you can accept unquestioningly. Now there are questions being asked – people are more willing to question religious and political leaders.

There is also the internet. But it takes a strong intellect and a very good sense of right and wrong to determine sense from nonsense on the internet.

JJ: With more people talking about this, questions being asked and different interpretations coming forward, does this not conflict with what you said earlier about the Maldives being a homogenous society with one interpretation of religion binding it together?

AGM: I think this is part of progress and development. People are becoming more open to new ways of thinking and alternative view points. I think it is becoming more mature. Even if we were to hold different views on religion, we are learning to disagree without being disagreeable.

JJ: What has been the impact of the Maldives’ graduation from the UN’s definition of a least developed country to a middle income country? Has this affected countries’ willingness to engage with the Maldives as a development partner? Does this risk the Maldives being cut off from support?

AGM: I don’t think we will be cut off. This a point we have with the international community. Although we graduated in 2011, this was not a cause for celebration because it meant we had more challenges. Many of the challenges we faced before we will continue to face as a developing island nation: our small resource base, our transport costs, our dependence on one or two resources, and vulnerability to what happens outside in tourism and fishing – we have little control over the world market.

We have a fairly small economy and we do not have the economies of scale. One of the things the donor countries promised was a smooth transition. The Maldives’ efforts during the LDC conference meant we were able to adopt a resolution on transition, which would continue to provide certain benefits to a country for three years, as well as call on donor countries to continue assisting with the transition.

The worst message the international community could give to other potential countries graduating would be to see us revert to an LDC. There should not be a fear of slipping back. There is a very ambitious document that came out in the LDC conference in Turkey, which pledged to graduate 10-12 countries in the next 10 year period. It is important that these countries welcome rather than fear graduation.

There should be certain benefits we receive after graduating and showing that we are on the right path, and a country worth investing in. Certainly we have challenges, but we also have opportunities, and become exploit to our benefit, and show we are successful, be our partner in development.

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First international fast food chain opens in Maldives

President Mohamed Nasheed attended the official opening of Marrybrown, a halal Malaysian fast food chain and the first international fast food chain to come to the Maldives.

The Marrybrown franchise currently operates in 15 countries worldwide. The restaurant in the Maldives was established by Lily International Private Limited, a leading business venture in the Maldives.

In his speech at the opening ceremony, the president thanked Lily International for its various contributions to Maldivian businesses since the 1980s.

The president also noted that the Maldivian lifestyle is changing to accommodate businesses enterprises such as Marrybrown, and that steps are being taken by the government to facilitate competition in the open market. The president said necessary legal amendments such as tax and state income laws were being made, and hoped more service enterprises would be established in the Maldives.

Marrybrown Chairman Lawrence Liew said the chain caters to a general population. “We have something different for everyone at a reasonable price in a clean environment. Our kids play centre creates a positive family space,” he said.

President Nasheed eats the inaugural fried chicken burger

After a moment of technical difficulties, Marrybrown opened its doors to the president, the press and the public. The President tasted the chain’s first fried chicken burger in the Maldives alongside franchise and government officials, and was given a tour of the facility which includes an air conditioned interior dining and play area and an upper open air veranda.

Families flocked to the restaurant doors for the next few hours, eager to acquire the free fried chicken meals that were being distributed in honor of the occasion.  A chipmunk mascot in a signature pair of green overalls welcomed children to the event outside, while groups were let in in stages to avoid crowding.

“The menu for Maldives was specially designed over the last six months by our chefs, and is a combination of Malaysian and Maldivian cuisines,” Co-Founder and Group Management Director Nancy Leiw told Minivan News.

When asked about the health value of the fast food menu, Leiw claimed Marrybrown “delivered all the necessary nutrients.”

“It’s a very balanced diet. Think about a burger. You have your carbohydrates, your protein, the lettuce gives you valuable vitamins and minerals, you have everything you need.”

Burgers are served with tomato and chili sauce packets and soft drinks.

Liew said that the franchise owner is “an ambitious businessman”, and that Marrybrown will be expanding business in the Maldives. “We don’t just serve food, we serve people. We will be providing opportunities in employment, business management, and local development,” she said.

The Marrybrown opening was facilitated by Malaysian staff, who will train Maldivian employees to “pass on our expertise and style of customer service,” said Liew.

The franchise’s nationality bore special connotations for the Maldives. “Malaysia is Muslim, and the Maldives is Muslim. We share a special synergy in Islam,” said Liew. “This synergy will allow us to work together in productive ways to create new opportunities for growth in line with our shared cultural standards.”

Liew noted that Marrybrown is celebrating 30 years of operation this year, and will be holding promotions and fundraising events for local charities and businesses throughout the year.

Marrybrown plans to open several more restaurants in the Maldives in the near future.

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ITEC Day 2011 to be celebrated in Maldives

The Indian Technical and Economic Cooperation (ITEC) Program will celebrate ITEC Day 2011 in the Maldives this year.

The Indian government launched ITEC in 1964 to promote bilateral cooperation and technical assistance to partner countries, of which the Maldives is one. The program provides economic expertise, manpower, skills and technology with the 156 countries that are friendly to India.

The High Commission of India has organized the event to foster positive relations between former ITEC scholars from India and the Maldives.

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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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STO plans new storage facility in Haa Alif atoll

The National Planning Council has approved the State Trading Organisation (STO)’s plan to build an oil storage facility on an unidentified island in the north’s Haa Alif atoll.

The facility would cover 600 square metres and contain over 200 tons of oil, reports Haveeru. It is said to be 10 times the size of a similar facility at Funadhoo.

STO’s Managing Director, Shahid Ali said studies show the project would benefit the Maldivian economy. He said it has already drawn the interest of foreign investors.

The project is awaiting approval from the Cabinet.

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Third of government’s Dhiraagu shares to be made public

The government has decided to release a third of its shares in local telcoms giant Dhiraagu to the public.

Dhiraagu a major player in the telecommunications, mobile and broadband internet markets of the Maldives, and is one of the country’s most profitable companies.

The government will make a third of its shares available to the public from October, to both local and foreign parties, reports Sun Online. Share prices have not yet been published.

The Maldivian government previously held 55 percent of Dhiraagu’s shares, while the British company Cable and Wireless held the remaining 45 percent. Upon winning the 2008 presidential election, President Nasheed’s government sold 7 percent of the shares to Cable and Wireless, reducing government shares to 48 percent and giving Cable and Wireless a controlling interest.

Minister of Economic Development and Foreign Trade, Mahmoud Razee, told Sun that studies would determine the prices and ratios of shares to be offered in local and international markets, and that the shares would be “affordable” to the average Maldivian.

Minister Razee also stated that as Dhiraagu was a strong company, people could benefit from buying its shares.

Opposition Dhivehi Rayyithunge Party (DRP) Deputy Leader Ibrahim ‘Mavota’ Shareef told Minivan News that the shares were valuable, but said he was not in favor of selling them.

“As far as [the DRP] is concerned, we do not believe this is a wise decision. Dhiraggu is a very profitable and well-managed company, and it makes a lot of money for the government. This is a time when we are undergoing an economic crisis, and we cannot afford to have these shares dispersed.”

Shareef said he thought most Maldivians would be interested in the shares, but said he doubted whether the majority of people would be able to afford them.

“The people who have the capacity to buy these shares are either foreign companies, or very rich Maldivians,” he said.

The government estimates that the sale of the shares will generate Rf 1.46 billion (US$95 million).

Shareef said the outcome would be obvious as soon as the shares hit the market.

“In the Maldives, we know who has the money. We know a majority of people don’t have the money. There must be some political reason for this decision, it’s not just an economic strategy,” he suggested.

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