Tag: Ibrahim Nasir International Airport

Airport development begins, with “no chance” of GMR returning to project

The Maldives Airports Company Limited (MACL) has begun a program to further develop the airport, to be done in multiple phases.

Launching a program worth US$5 million to develop Ibrahim Nasir International Airport’s (INIA) ground handling on Thursday, MACL Managing Director ‘Bandhu’ Ibrahim Saleem revealed that various plans had been set in place for the development of INIA.

President Abdulla Yameen has today been quoted in Indian media as stating that any future management of the airport will not be carried out by foreign companies – with the Maldives government itself the preferred overseer.

Saleem told local media that, in addition to the introduction of new baggage tractors – launched during Thursday’s event – the company will also be introducing four new passenger carrier buses, heavy load vehicles for baggage carrying, a new baggage staircase and a mechanism to assist with boarding and unboarding patients with medical conditions within a period of 60 days.

He added that the projects are being conducted under the government’s 100 day policy implementation plans.

The record US$511 million development of the airport under Indian infrastructure giant GMR was prematurely terminated under the previous administration, prompting the filing of a US$1.4 billion arbitration case in Singapore.

Saleem explained that the ground handling equipment currently in use is old and damaged, which causes unnecessary delays in operations, assuring that the introduction of new equipment will allow passengers to observe a “remarkable improvement” in the speed of service.

“We are spending company money on these programs. We have not been able to purchase any such equipment since 2007,” he was quoted as saying.

Many projects underway

According to Saleem, the program is one among many development plans the company is undertaking.

Stating that the biggest challenge faced by the airport today is the issue of flight trafficking, he said that a permanent solution to overcrowding in the airport can only be found through the building of a second runway. He did, however, note that such a project would take a “tremendous amount of time”.

Adding that a review of the previously compiled Scottwilson development master plan of the airport would commence in the next two weeks, Saleem said that compiling such a plan anew would take around one year. He stated that global experts will be arriving within two weeks to assist in reviewing and updating the plans.

While the government is deliberating on undertaking such a project, said Saleem, reclaiming land and building a new runway would itself take at least two years to reach completion.

“Flyme is bringing in a new plane. Maldivian is also bringing in another new plane. So we need a runway upgrade at the airport as soon as possible. Nevertheless, it is not an easy thing to do,” he said.

The managing director added that, while these projects are pending, the airport is currently implementing smaller development projects immediately. As an example, he revealed that the construction of a new 35,000 square meter flight apron will be contracted to an external party in the next two weeks.

“We cannot do airport development in bits and pieces separately. It must be done all together. Once the Stockwilson plan is reviewed, we can begin the main work,” he said.

Saleem added that in 2014 itself, the airport traffic will increase immensely, and that the government will be focusing on reviewing the Stockwilson plan with a focus on connecting the airport to Malé.

GMR welcome to engage in other projects, not airport development: president

Meanwhile, President Abdulla Yameen has told Indian media that the Maldivian government is not even considering resuming the airport development contract with Indian infrastructure giant GMR.

While he repeated that the government is seeking an out of court settlement regarding the arbitration case concerning the cancellation of the GMR contract in the Waheed administration, Yameen said that the Maldives “had nothing against the GMR itself”.

“I am not saying we are saying no to GMR. What I am saying is total management of the airport is far too important for the Maldivian government (to hand over). We have nothing against GMR of any Indian company. It is just that the international airport is far too important for us, commercially and from a security point of view,” Yameen is quoted as saying to Indian publication The Hindu.

“The total operation of our airport will probably not go to any foreign party. Probably not even go to a Maldivian company. It will be undertaken by the MACL, a 100 percent government company,” he stated.

Yameen affirmed that deliberations of settling the GMR issue out of court has already begun, adding that the company is welcome to pursue other projects in the country.

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GMR chair expects arbitration proceedings to be concluded by May

GMR Group Chairman GM Rao expects arbitration proceedings in its dispute with the Government of Maldives to be concluded by May next year, India media has reported.

Rao was quoted whilst commenting on the infrastructure company’s bid to secure an airport development deal in the Phillipines.

A record-breaking US$5oo million deal to re-develop Malé’s Ibrahim Nasir International Airport was cancelled by the Maldives Government in late2012.

On November 27, then-President Dr Mohamed Waheed’s cabinet declared the agreement to be ‘void ab initio’ – invalid from the outset – ordering the developer to leave.

GMR subsequently took the case to a Singapore court of arbitration, claiming US$1.4billion in compensation – a figure that eclipses the Maldives’ state budget.

During the second round of procedural hearings in August this year, the tribunal acceded to GMR’s request to split the proceedings into firstly determining liability, before quantifying the amount of compensation to be paid separately.

Minivan News understands that the tribunal agreed this would simplify examination and quantification of what was effectively three claims being made in the hearing: GMR-MAHB’s claim for compensation as per the termination clause of its concession agreement, its parallel claim for loss of profits over the lifespan of the agreement due to its termination, and the government’s counter-claim for restitution should the tribunal decide in its favour.

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Maldives must address “deteriorated” tourist services to protect industry: Chamber of Commerce

The Maldives National Chamber of Commerce and Industry (MNCCI) has warned that the “deteriorated” and “outdated” amenities used to support the Maldives’ lucrative resort industry will negatively impact growth across the tourism sector, if left unaddressed.

MNCCI Vice President Ismail Asif told Minivan News that despite the “seven star” reputation of the country’s exclusive island resorts, the group was receiving growing complaints that the service, amenities and treatment afforded to guests by the country’s public and private sector threatened to significantly damage the destination’s reputation.

The comments were raised after several multinational hospitality groups alleged earlier this month that the sale of the Maldives’ two main seaplane operators to US-based private equity fund Blackstone in February was having a “significant” negative impact on the wider tourism industry as a result of the monopoly created.

MNCCI Vice President Asif told Minivan News that the chamber had not received any “particular concerns” related to the Blackstone deal, but had instead noted growing criticisms of standards of service from state and private institutions vital to the country’s resort industry.

“We have had e-mails from foreign investors and business people about the general service and standards at the country’s airport as well as the quality of transportation [available to tourists],” he said. “We are not able to distinguish [whether the complaints] are about seaplanes or speedboats.

Airport condition

Asif also identified the current condition of Ibarahim Nasir International Airport (INIA), a general lack of amenities, and the attitude of customs and immigration officials towards foreigners visiting the country as major concerns needing to be addressed by the wider industry.

Late last year, the present government controversially scrapped a US$511 million contract signed under the previous administration with India-based infrastructure group GMR to develop and manage an entirely new airport terminal.

The state is subsequently facing a US$1.4 billion compensation claim from GMR for its decision to terminate the contract over allegations of corruption, claims ultimately rejected by the country’s Anti-Corruption Commission (ACC).

The MNCCI has nonetheless maintained that the government’s decision to abruptly terminate the GMR contract did not hurt foreign investor confidence, with Asif claiming that the existing airport structure could be modified to improve service standards. With the eviction of GMR construction of the new terminal is stalled at 25 percent complete, according to the government’s own engineering assessment.

“Foreign businesses don’t want to get into politics here. In the meetings we have had there are two major concerns raised. Internationals want the Maldives to remain as it is. The feedback we get is they want the airport as it is, but with improved services,” he said. “This doesn’t mean a new five story building is needed. For instance free wifi is not [at the airport at present]. Certainly not at the standards visitors would expect.”

Criticisms had also been raised over the conduct of customs officials and regulations banning tourists from bringing alcohol into the country to consume on the country’s resorts, according to the MNCCI.  Asif claimed there was minimal information provided to visitors about restrictions on alcohol and pork products outside of resorts.

“Expensive wine is often confiscated from guests, who are not getting it back. I understand visitors must act within local laws, but it is also important to correctly inform them as well,” he said. “Often these are very expensive gifts given to people while they are travelling, and I don’t see why they cannot bring such items to their resort.”

“It’s not like tourists will bring large amounts of liquor with them. Often the value of the goods they are holding is high, but a customs person will have no idea of the goods or the culture. Their response is ‘liquor is prohibited here’,” he claimed, accusing police and other state authorities of favouring restrictive laws on tourists to reduce their own levels of responsibility.

Asif argued that all national bodies needed to take greater responsibility to ensure treatment of tourists matched the services being provided by the resort industry.

“If it is too much hassle for tourists to visit, people will not come here [on holiday] and will look to other destinations,” he said. “Tourism is is based around trying to make clients happy. We are concerned about this and the need to make things easier here.”

Stability concerns

The MNCCI has also stressed the need for political stability, the lack of which he had alleged has had a considerable impact on investor confidence and business development since the controversial transfer of power on February 7, 2012.

With a run-off vote scheduled for September 28 expected to decide whether former President Mohamed Nasheed or MP Abdulla Yameen will take office over the next five years, Asif said it was important to have an elected and head of state – no matter the candidate.

He argued that a Commonwealth-backed Commission of National Inquiry (CoNI) last year dismissed Nasheed’s allegations that he was removed from office in a “coup d’etat” had led to an increase of larger-scale investment – particularly with resorts.

However, with a number of properties remaining under construction, stability within the country’s domestic politics and court system was a huge problem needing to be addressed, he said.

Tourism Minister Ahmed Adheeb was not responding to calls at time of press in response to the MNCCI’s concerns.

Meanwhile, the government earlier this month said it hoped to secure longer-term financing to plug a shortfall in annual revenue that has seen the number of 28-day Treasury Bills (T-bills) sold by the state almost double in July 2013, compared to the same period last year.

Finance Minister Abdulla Jihad told Minivan News at the time that the state’s increased reliance on short-term T-bills between July 2012 and July 2013 reflected the current difficulties faced by the government in trying to raise budgeted revenue during the period.

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AG slams former government over foreign investment “damage” from alleged lack of financial research

Attorney General Azima Shukoor has accused the previous government of failing to conduct sufficient research before signing several major foreign investment projects, that had now been terminated by the present administration.

Azima was quoted by private broadcaster Villa Televison (VTV) (Dhivehi) as claiming that unspecified “economic damage” currently faced by the state had resulted from a lack of economic and legal research by the administration of former President Mohamed Nasheed.

She was quoted in local media arguing that “damages” to the state had resulted from a number of foreign investment projects signed by Nasheed’s administration, including the US$511 million concession agreement signed with GMR to build and manage a new terminal at Ibrahim Nasir International Airport. Azima also raised over another deal with Malaysia-based Nexbis to manage and operate a border control system in the country.

Both agreements have since been terminated by the administration of President Dr Mohamed Waheed, with the Maldives facing a US$1.4 billion compensation claim from GMR after its contract was suddenly declared void in November. The company was then given a seven day notice period to leave before being evicted by authorities.

Nexbis was last week given 14 days to vacate by the government, which likewise terminated its concession agreement with the company.

However immigration officials last week questioned whether  replacement technology was ready to be implemented, in place of the Nexbis system.

Former government response

Responding today to the attorney general’s criticisms, Mahmood Razee, former economic development minister during the Nasheed administration, stressed that the former government had engaged with the World Bank’s International Finance Corporation (IFC) before moving ahead with the airport privatisation program.

As such, he rejected accusations that no research had been conducted before undertaking such a high profile project.

“Clearly this was not a stab in the dark,” Razee said of the deal. “[The World Bank engagement] determined how best to proceed with the airport development for the benefit of the government and the people. After looking at the revenue streams, it was concluded that it was best to move forward with the public private partnership.”

He claimed that aside from potential financial benefits of agreeing the deal, the consortium consisting of GMR and Malaysia Airports Holdings Berhard (MAHB) had been picked based on the companies’ experience in managing other airport projects.

With the deal now terminated, Razee added that it remained critical to secure development at the airport as soon as possible, claiming the current facilities at INIA did not meet the required standards.

Waheed’s government last year accused the IFC itself of negligence during the bidding process for the development of INIA, charges the World Bank rejected at the time.

By June this year, the Maldives’ Anti-Corruption Commission (ACC) ruled out corruptionin the awarding of a concession agreement in June 2010 to the GMR/MAHB consortium. The government meanwhile continues to insist the sudden termination of the contract was in the national interest.

“Cause and effect”

Former Economic Development Minister Razee said the Maldives would remain reliant on development funding for future development projects, which would cost hundreds of millions of dollars out of reach of the government.

With the country now lacking sufficient rating to obtain credit commercially, Razee argued that development funds remained the only means for a country like the Maldives to secure sizeable finance.

The present government’s decision to cancel two major foreign investments would have a “cause and effect”, he suggested.

Should the MDP be elected to power in the presidential election scheduled for next month, the party would have to consider returning to negotiations with GMR in a bid to avoid huge financial fallout from arbitration proceedings now being conducted in Singapore.

He claimed that the cooperation of international bodies such as the World Bank in securing the GMR deal would likely to be sought in other high-profile investment projects sought under an MDP government.

Economic problems

The Maldives National Chamber of Commerce and Industries (MNCCI) meanwhile last month accused senior politicians under successive governments of trivialising the severity of the country’s economic problems.

MNCCI Vice President Ishmael Asif claimed parties were addressing financial concerns and issues impacting foreign investment with negative slogans rather than actual policies in the run up to September’s election.

While accepting the present “bad shape” of the Maldives economy, the chamber of commerce was particularly critical of what it called negative economic campaigning by senior figures in the last two governments – arguing they had done little to address an ongoing shortage of US dollars and a lack of investment banking opportunities and arbitration legislation in the country.

Asif’s comments were made in response to claims by the government-aligned Progressive Party of Maldives (PPM) that foreign investors were now turning away from the Maldives due to concerns about political stability and safety in the country.

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Hulhumale’ terminal port inaugurated by President Waheed

President Dr Mohamed Waheed inaugurated a new port terminal on Hulhumale’ Thursday (June 27), praising the development for the potential impact it will have on the island’s economy.

During a speech given at the inauguration, the president said that the new port formed part of his government’s commitment to providing basic facilities to Hulhumale’, as well as making it easier for the public and businesses to transport goods to and from the island.

According to the President’s Office website, Dr Waheed also underlined the importance of having a port that was joined by land to Ibrahim Nasir International Airport (INIA) – the country’s main airstrip.

He therefore expressed hope that the port would not only lead to a rise in the number of imported goods via both sea and land, but also help further development on Hulhumale’ itself.

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PPM will address Maldives’ strained relationship with India: Gayoom

Former President Maumoon Abdul Gayoom has pledged during a visit to India that the Progressive Party of Maldives (PPM) will repair strained relations between the two countries should it come to power in September, local media has reported.

The three day visit, which concluded Thursday (June 6), saw the former president meet with dignitaries including Prime Minister Manmohan Singh to discuss bilateral relations and the impact of the Maldives government’s decision to last year cancel a US$511 million airport deal with India-based infrastructure giant GMR.

In interviews with Indian media, Gayoom expressed sadness that the Maldives’ relationship with India had been impacted by President Dr Mohamed Waheed’s administration deciding to evict GMR from the country with seven days notice.

Gayoom blamed Nasheed for not obtaining parliamentary approval and “consulting all political parties” before signing the deal with the GMR-Malaysian Airports consortium.

“This was a mistake. Had he consulted all political parties, the public would not have formed the impression that corruption had taken place. Then we told the next President Mr Waheed that he should hold discussions with the GMR Group and the Indian government to arrive at an acceptable solution, after which the government was free to act on its own. Unfortunately, this was not done and suddenly there was this unhappy ending,” Gayoom was reported as saying in the Hindu.

Waheed’s government late last year declared the contract between GMR and the Nasheed government, which was vetted by the World Bank’s International Finance Corporation (IFC), as ‘void ad initio’, or invalid from the outset. It is currently disputing its obligation to compensate the company in arbitration proceedings, arguing that the termination clause could not be applied to a contract it had deemed invalid.

Gayoom told Indian media that former President Mohamed Nasheed – whose government was controversially replaced in February last year – had to take the majority of blame for the GMR contract dispute, despite not being in office at the time of its cancellation.

“The GMR experience was not a very good one for us. It began badly with [Nasheed] not informing parliament,” Gayoom was reported as saying in the Indian Express.

“By law, he should have had it passed by parliament. Some may even say it had an illegal beginning. [The cancellation] was a very populist move at the time as the public had a perception that the contract was bad for the country. The way it was handled was not good. I am sad that this has somehow affected our bilateral relations. We want to overcome that and restore our relationship with India to its former level,” Gayoom told the paper.

The government’s sudden eviction of the Indian investor did not however appear on a list of 11 grievances handed to all senior Maldivian reporters by the Indian High Commission in January, which instead included concerns such as discrimination against Indian expatriates and the confiscation of passports by Maldivian employers.

The list’s release was followed by the Indian High Commission issuing a statement in early February slamming local media in the Maldives for “misrepresentation and twisting of issues”.

Gayoom nonetheless told the Hindustan Times publication this week that he would endeavor to maintain strong bilateral relations with India, claiming that people who were “anti-GMR” were not “anti-India”.

The PPM is presently part of the coalition government backing President Waheed, whom Gayoom said had been requested to find an “acceptable solution” for both GMR and the Indian government that addressed concerns about the airport deal.

Fierce criticism

Among the most fierce critics of the GMR airport deal before its cancellation last year were the now government-aligned Dhivehi Qaumee Party (DQP ), led by President Waheed’s Special Advisor Dr Hassan Saeed.

Saeed in November last year appealed to Prime Minister Singh to terminate the GMR deal, writing that “GMR and India ‘bashing’ is becoming popular politics”.

While in opposition in December 2011, the DQP also released a 24 page pamphlet alleging that allowing GMR to develop Ibrahim Nasir International Airport (INIA) was “paving the way for the enslavement of Maldivians in our beloved land”, and warning that “Indian people are especially devious”.

Former Home Minister Dr Mohamed Jameel Ahmed, the DQP’s Deputy Leader at the time of the pamphlet’s publication, was recently unveiled as the running mate of PPM Presidential candidate Abdulla Yameen – Gayoom’s half brother.

SOFA a concern: Gayoom

Gayoom – described in the Hindu as a “sprightly 76 year-old” – also expressed concern about the Status of Forces (SOFA) agreement being negotiated between Waheed’s government and the United States.

“I am not happy. I didn’t want that to happen,” he said, warning that such a move risked upsetting the balance of power in the Indian Ocean.

A source within the PPM said former President Gayoom, during his 30 years as head of state had forged strong relations with various regional powers such as India and Sri Lanka.

The source said that while the handling of the GMR contract remained a controversial issue, the recent strain in the relationship between India and the Maldives was the result of a number of factors, including “certain difficulties” facing expatriate workers from India living in the country.

“We have a large number of professional expatriates from India working here in health, education and accountancy. The [Indian] embassy here in Male’ has aired some of the issues with us,” the party source claimed, adding that the Maldives also had grievances over obtaining visas to travel to India that needed to be resolved.

The party official claimed that Indian authorities had raised these issues not only with the PPM, but all other stakeholders both in government and the country’s political opposition, presently represented by the Maldivian Democratic Party (MDP).

Highs and lows

Despite admitting that every country has high and lows in their bilateral relations with neighbours, Indian High Commissioner to the Maldives Rajeev Shahare has previously emphasised what he called the country’s “unshakable” long-standing relationship with the Maldives.

“During my tenure, I will endeavour to further strengthen the relationship between India and the Maldives, which is already very strong with an unshakable foundation,” he said on April 10, shortly after his appointment.

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Maldives government denies US$160 million arbitration talks with Axis Bank

The Attorney General (AG’s) Office has denied receiving any notice of arbitration from Axis Bank, one of the lenders backing a US$511 million airport development project voided by the government late last year.

In November 2012, President Dr Mohamed Waheed’s government declared void a concession agreement signed by the previous government with Indian firm GMR, to manage and build a new terminal at Ibrahim Nasir International Airport (INIA), and ordered the company to leave the country within seven days.

Following the decision – later cleared by Singapore’s Supreme Court – project lender Axis Bank announced its intention to seek a repayment of loans taken out for the project, which were guaranteed by the Ministry of Finance and approved by the AG’s Office under the former government.

“Arbitration process”

The India-based Financial Express publication reported yesterday (April 5) that Axis Bank had initiated an arbitration process with the Maldives government as part of efforts to recover loans granted to GMR with an estimated value of US$160 million (MVR 2.4 billion).

Ahmed Usham, Deputy Solicitor General for the AG’s Office, told Minivan News today that although some discussions had been held with Axis Bank, there had been no notice of arbitration given to the state by the finance group over the loan issue.

“We have requested some documents from [the bank] and we are set to meet with them after receiving these,” he said.  “There has been no talk of arbitration.”

Usham added that the documents requested from Axis Bank by the AG’s Office pertained to loans taken from GMR as part of the INIA development.

Acting Minister of Finance Ahmed Mohamed said he too was not aware of any arbitration hearings concerning Axis Bank, or even if talks had been held on the matter.

“All I am aware of is that there was a teleconference held Thursday (April 4),” he stated.

GMR arbitration

The government meanwhile is set to participate Wednesday (April 10) in the preliminary hearing of a separate arbitration case with GMR over the decision to void its airport concession agreement .

Authorities have previously told local media that the meeting, scheduled to take place in London, was not an official arbitration hearing, but rather a means to outline the timeline for both parties to present their case. Once the process for the arbitration is agreed, official hearings are expected to begin in Singapore.

According to the Attorney General’s office, the Maldives will be represented by Singapore National University Professor M Sonaraja, while former Chief Justice of the UK, Lord Nicholas Addison Phillips, will represent GMR.

The arbitrator mutually agreed by both GMR and the government is retired senior UK Judge, Lord Leonard Hubert Hoffman.

Concession agreement

In 2010, GMR-Malaysia Airports Holdings Berhad (MAHB) consortium, the government of former President Mohamed Nasheed and Maldives Airport Company Limited (MACL) entered into a 25-year concession agreement worth US$511 million (MVR 7.787 billion) – in which the GMR-MAHB Consortium was contracted with the management and upgrading of Ibrahim Nasir International Airport (INIA) within the 25 year contract period.

However in November 2012, the government of President Dr Mohamed Waheed Hassan Manik declared the developer’s concession agreement void and ordered it to leave the country within seven days.

A last minute injunction from the Singapore High Court during arbitration proceedings was overturned on December 6, after Singapore’s Chief Justice Sundaresh Menon declared that “the Maldives government has the power to do what it wants, including expropriating the airport.”

GMR is seeking US$800 million in compensation for the sudden termination, while the Maldivian government is contending that it owes nothing as the contract was ‘void ab initio’, or invalid from the outset.

If decided in GMR’s favour, the outcome of the case could potentially see the Maldives facing sovereign bankruptcy, with millions of dollars in additional debt emptying the state’s already dwindling reserves, crippling the country’s ability to obtain further credit, and potentially sparking an economic or currency crisis.

If decided in the Maldives’ favour the case risks setting a legal precedent for effective nationalisation of foreign investments signed under previous governments, and placing existing investors further at the mercy of the country’s turbulent politics.

Kuwaiti interest

Discussing the future of INIA on Thursday, President Waheed was reported in local media as stating that authorities in Kuwait had expressed an interest to “assist in the development” of INIA, following a recent official visit to the country.

“Kuwait is really interested in the airport. It’s because we have received a great deal of assistance from the Kuwait Fund to develop the airport so far. They are well aware of it,” he was quoted in newspaper Haveeru as saying.

“They really believe that we have managed to develop the airport with the assistance of Kuwait. So there is a lot of interest. They are very happy that the government has now taken the initiative to develop the airport.”

President’s Office Media Secretary Masood Imad said he was in a meeting and unavailable for comment when contacted by Minivan News.

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Universal Enterprises Chairman appointed head of MIAL

Universal Enterprises Chairman Mohamed Umar Maniku has been appointed as head of Male’ International Airport Limited (MIAL).

Along with Maniku, Island Aviation Chairman Bandhu Ibrahim Saleem was appointed as the Managing Director of the company by President Mohamed Waheed Hassan Manik on Thursday (March 28).

According to local media, Maniku also filled the position of chairman of the ‘Airport Advisory Committee’, a committee that was constituted by Waheed to advise the government on airport management.

The President’s Office confirmed that Ahmed Munawwar, Thoriq Ibrahim, Abdulla Yazeed and Ibrahim Iyas were appointed to the board of directors by Waheed.

Local media reported that once MIAL is fully established, all matters regarding to the management and development of Ibrahim Nasir International Airport will be carried out by the company.

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Restrictions on foreign investment to remain under amended business registration bill

A ban on foreign investment in the Maldives involving capital of under US$5 million will continue under amendments to the country’s Business Registration Bill proposed by parliament.

The health, accounting, taxation and financial services sectors will be exempted from the minimum investment requirement. However involvement in any other sector will require a foreign national to have capital of over US$5 million and a deposit of US$1 million with a group approved by the Maldivian government, local media has reported.

Parliament’s Committee on Economic Affairs omitted a proposed amendment from the latest draft of the Business Registration Bill, that would have potentially opened up smaller businesses such as retail and coffee shops to foreign investors.

The Maldives National Chamber of Commerce and Industries (MNCCI) has called for even tighter restrictions on specific sectors, stating a need to protect smaller-scale local businesses such as restaurants and retail outlets.

Former Minister of Economic Development Minister Mahmoud Razee said the Business Registration Bill was designed to open up new forms of capital from foreign investors in areas such as large-scale agriculture and fisheries projects, rather than allowing foreigners to directly compete with local retail businesses.

President Dr Mohamed Waheed has returned the bill after it was passed by parliament in June 2012, citing unspecified “socio-economic” concerns.

According to the Sun Online, President Waheed opted not to ratify the bill over concerns it would abolish a law restricting foreign involvement in imports, cafes and canteens.

The bill is also reported to include provisions restricting foreigners to involvement in the wholesale trade,  with the exception of duty free stores, while also restricting businesses said to be ‘against the interest of the Maldivian public’.

Investment friendly

MNCCI Vice President Ishmael Asif told Minivan News that foreign investment should be opened up in the Maldives, but only in terms of large-scale projects like resort development and infrastructure – areas where Maldivians lacked sufficient experience.

Responding to the latest draft of the bill, Asif contended that the Maldives had always been “very friendly” to foreign investors and would continue to welcome large-scale projects such as resort and airport development.

The government last November cancelled the country’s largest single foreign investment project – a US$511 concession agreement with Indian infrastructure giant GMR to manage and develop a new terminal at Ibrahim Nasir International Airport, declaring the sovereign agreement “void” from the start. The company was then given seven days to leave.

Asif said while the MNCCI had not yet had any input on the current iteration of the bill since it was returned to parliament, it was concerned about provisions allowing a foreigner with over US$5 million in capital to invest in any sector.

Asif said that the chamber of commerce favoured sector-specific restrictions that would outlaw any foreigner from investing in areas such as retail or food and beverage. However, he maintained that opportunities should remain for international investors to join with medium-sized local businesses in the form of joint ventures.

With the bill undergoing review at parliamentary level, Asif accused regulators of remaining far behind the industry, pointing to the emergence of online consumers and the lack of an international secure payment service like ‘Paypal’.

“A lot of the time regulators are far too behind the industry. The focus of the bill should be to encourage enterprise here,” he said.

Business Registration Bill

Razee said the business registration bill was devised under the Nasheed administration to open new areas for foreign investment, as well boost the capabilities of national industries in the longer-term.

He added that investment areas such as in the retail sector would have been protected from direct competition from foreign investors, while  large-scale investment in areas such as agriculture and the fisheries sector would be promoted.

The bill was first proposed as part of a wider economic reform package championed by Nasheed’s administration, which was further revised following consultations in 2011 with the International Monetary Fund (IMF).

These policies included introducing a general Goods and Services Tax (GST), raising import duties on pork, tobacco, alcohol and plastic products, raising the Tourism Goods and Services Tax (T-GST) to six percent, and reducing import duties on certain products.

Razee said last year that the registration bill was intended to provide a “clearer means” for facilitating foreign investment in the Maldives.

“We were trying to make it easier for foreign shareholders to register here,” he said.

Acting Minister of Finance and Treasury Ahmed Mohamed, State Minister for Finance Abbas Adil Riza, and Presidents Office Spokesperson Masood Imad were not responding to calls at the time of press.

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