Tag: maldives business

DRP favours court resolution to GMR dispute as coalition partners prepare to “take to the streets”

The Dhivehi Rayyithunge Party (DRP) will not join its fellow government coalition partners at a gathering in Male’ to oppose an airport privatisation contract with India-based infrastructure group GMR, claiming any resolution to the dispute must be made through the courts.

DRP Spokesperson Ibrahim Shareef has told Minivan News that while the party itself questioned if the GMR deal was in the best interest of the public, “due process” had to be followed through proper legal channels in order to establish if any wrong doing had occurred with the airport contract.

“Right now we do not feel that the best option is to take to the streets on this matter. We do not know what the purpose of this [coalition] gathering is, so we will not be taking part,” he said.

Shareef added that the party’s position remained that the government was bound to the agreement should it fail to prove through due process that the contract to develop and manage Ibrahim Nasir International Airport (INIA) was invalid.

The comments were made as key financial figures within the former government maintained this week that the deal was vital to not only modernise and boost efficiency at the airport, but also to address concerns over present state expenditure through a focus on privatisation.

Under the terms of the agreement – a US$511 million deal representing the largest ever case of foreign investment in the Maldives’ history – GMR agreed to a 25 year concession agreement to develop and manage the site, as well as redevelop the existing terminal by the end of this year.

The document was overseen by the International Finance Corporation (IFC), a member of the World Bank group and the largest global institution focused on private sector projects in developing countries.

However, the Maldives government earlier this month accused the IFC of negligence during the bidding process for INIA – allegations there were rejected by the organisation amidst continued calls from government-aligned parties to renationalise the airport.

Both the government and GMR are presently involved in an arbitration case in Singapore over the airport development.

Coalition gathering

With the arbitration ongoing, six government-aligned parties are set to hold a gathering from 9:00pm on Thursday night at the Artificial Beach area of Male’ calling for INIA, as the country’s main airport, to be “returned to Maldivians”.

Through a movement called “Maldivians’ airport back to Maldivians”, the coalition – excluding the DRP – told local media this week that the gathering represents the first in a series of activities aimed at regaining management of the airport.

According to local newspaper Haveeru, Sheikh Imran Abdulla of the government-aligned religious Adhaalath Party (AP) said the gathering was aimed at showing the coalition would take a “united stand” on opposing the GMR deal until the airport was “liberated”.

“Our hope is on the night the true feeling of the Maldivian people would be revealed on the airport issue,” he was quoted as saying by Haveeru.

The coalition movement is also expected to detail what it has claimed are losses sustained to the local economy from the awarding of the company to the Indian infrastructure group.

Sheik Imran was not responding to calls at the time of press. However, fellow AP member and Maldives’ Islamic Affairs Minister, Sheikh Mohamed Shaheem Ali Saeed, said he had “no idea” about any such gathering being held.

Meanwhile Dr Hassan Saeed, head of fellow coalition member the Dhivehi Qaumee Party (DQP), referred a query by Minivan News about the gathering to the party’s Secretary General, Abdulla Ameen. Ameen was not returning calls at the time of press.

Progressive Party of Maldives (PPM) Parliamentary Group Leader Abdulla Yameen meanwhile referred enquiries about the gathering to Secretary General Yumna Maumoon – daughter of former President Maumoon Abdul Gayoom. Yumna was not responding to calls at the time of press.

DRP Spokesperson Shareef claimed that even should the validity of the agreement between GMR and the former government be found to be questionable, it remained for the courts to decide on such a matter.  Shareef added that senior members of his party had been penalised for holding such views by political opponents.

“Both [DRP Leader] Ahmed Thasmeen Ali and Parliamentary Speaker Abdulla Shahid have been accused of taking bribes on this matter and trying to obstruct efforts to take the airport,” he said.

Shareef claimed the allegations had been devised by a faction formed in the DRP by members loyal to former party head and national President Gayoom, which later branched off to form the PPM party last year.

“Gayoom’s supporters had wished to take the airport back by force,” he said. “I’m not saying the deal is fair, but first we can look to renegotiate terms and get a new agreement. Also the government has the resources to investigate the deal and make the best decision on how to move forward to benefit the Maldivian people.”

Shareef added that the party had therefore decided against “taking to the streets” with other parties in President Waheed’s coalition government.

“We are not saying that the former government were not involved in something improper with the agreement,” he claimed. “But we do not see the previous government as an MDP government, or the current government as a DRP or PPM government, it is always the government of the Maldives, so if an agreement made by the government is found to be valid, than it must be honoured under the law.”

Privatisation pursuit

Speaking yesterday on private broadcaster Raaje TV, former Economic Development Minister Mahmoud Razee said the GMR deal reflected a commitment by the former government to pursue privatisation as outlined in the MDP’s manifesto.

“Firstly, if or when anything is run like a business, private people are more skilled and efficient. They are far more competent and they work for profit unlike the government,” he claimed.  “This means it requires less cost for the government, but needs more outside investment or capital. Private people are more skilled and efficient in terms of managing. The end product thus is more beneficial.”

Addressing criticisms from some local politicians that privatisation provided no benefits to the nation, Razee conceded there was an element of truth to the assumption, but stressed it did not reflect longer-term economic benefits.

“Because the investment is huge, the project is big; the first beneficiaries are always the investors. True. The benefits go to the foreigners,” he said. “In foreign countries, they make a consortium, which means the profits are being shared within multiple parties. For example, if a Turkish company is investing here, it doesn’t mean they do everything themselves. If they are developing a property, the construction, or other necessary work is done through local companies.”

Also speaking during the programme was MDP member and former Minister of Finance and Treasury Mohamed Shihab. Shihab claimed that in cases where there was limited national budgets such as in the development of a new airport terminal, then finance should be sought from outside sources.

He added that as within the case of technology and other expertise, and pointed to local resort groups such as Universal Resorts Maldives as examples in the country’s past where foreign partnerships had benefited the country’s economy.

“Resort owners do [private partnerships] because they profit from it. Let’s conduct a survey among resorts. Definitely the salaries and service charges are higher in foreign managed companies. It is a fact that, countries where foreign investment has been made are far more developed.”

Speaking earlier this year, INIA Chief Executive Officer Andrew Harrison claimed that INIA would remain a Maldivian owned enterprise that would be continuously developed by the company for the duration of the tender.

“We are just the caretakers here,” he said.  ”The airport remains and has always been owned by Maldivians.”

Harrison contended that to ensure profitability for its investment in the airport, GMR was itself committed to strengthening the wider Maldivian economy by working with local businesses, industry and contractors.

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Hospitality expo head claims record exhibitor numbers defy impact of Maldives “unrest”

The 2012 Hotel Asia Exhibition and International Culinary Challenge is said to be at maximum capacity in terms of exhibitors this year – a trend organisers have claimed defies the negative impact to the industry of unrest in the Maldives during the last six months.

Husnie Rauf, Senior Manager of Maldives Exhibition and Conference Services (MECS), said the company had been “surprised” by the interest shown from exhibitors taking part in the show, which attempts to link the country’s secluded resort industry and local hotel trade with “world class” suppliers. Over the last decade, the exhibition has also held a culinary challenge that sees representatives from the resorts of the Maldives and neighbouring Sri Lanka competing in cuisine challenges, Rauf added.

“With all the political uncertainty this year, we have been surprised that we have a full house, we have even had to reject some applications from exhibitors and contestants for the culinary challenge,” he said.

“We have grown this year to be the country’s biggest ever exhibition with over 150 companies exhibiting at present.  These companies represent groups some 40 to 50 different countries. Right, now we are at capacity and cannot handle any more attendees.”

The three day-exhibition, which concludes today at Male’s Dharubaaruge conference centre,  aims to provide a diverse range of good and services; from fine foods and drink, to boating supplies and renewable energy technology.

Amongst the attendees was Desmond James, Director of Indonesia-based Hospitality Essentials, a supplier of hotel accessories such as soap dishes, dispensers and waste bins that he says presently works with between 30 to 40 of the country’s resorts.

James, who has attended the exhibition in the Maldives for several years, told Minivan News the expo remained a good opportunity for doing business in the country, as well establishing new contacts in the market.

However, he questioned whether claims from the event organisers about record exhibitor numbers reflected actual growth in the number of individual participants.

“I would say claims about a record number of exhibitors here could be a bit misleading, I think what you have are a number of larger booths, which perhaps take up the space that would be used by several exhibitors,” he said. “It is a good show, one of two that we participate in the Maldives along with the MHTE [Maldives Hotel and Trade Exhibition] event,” he said.

Having built a network of contacts in the country over the last five years, James said the expo, in reflection of the continued growth of the Maldives island resort model, did provide real opportunities to expand business.

“Our operations here are based on a combination of established contacts and meeting new companies. There are always new projects happening here and it is also a good way to catch up with familiar faces,” he added.

James claimed that for this year’ show, heavy rain in the Male’ area during the event’s first day negatively impacted the number of visitors, but added that improved weather conditions yesterday helped a much better turnout.

However, he stressed that the event itself continued to retain a strong focus on food products and services rather than the wider supply chain. James believed that such a focus limited some of the potential value for resort operators and key local industry players in attending the show.

Elsewhere on the convention centre’s first floor, alongside Sri Lankan real estate specialists, beverage groups and major multi-nationals like ingredients manufacturer Barry Callebaut, was a stand specialising in renewable energy technologies.

Over the last few years, successive governments in the Maldives have pledged to try and develop a more sustainable economy for the Maldives – commitments that have also been adopted by some resort groups to play up their eco-credentials.

Guy Sizer, who represents a group called South West Windpower at the show, concurred that the expo was something of an “unusual” event for a specialised energy-focused tech company to be taking part in considering the seemingly large focus on food and beverages.

However, Sizer added that for local partners based in and around the Maldives, the show over the last few years had remained “pretty useful” in order to build contacts with the local resort industry and discuss adoption of renewable technologies.

“There is certainly interest it seems in the local population regarding renewable energy, particularly as fears grow over the cost and reliance on diesel here,” he said.

Sizer said that from a Maldives perspective, there had been a great deal of interest in alternative energy supply from local people, however he added these ambitions had not always been backed up with investment.

“There is a strong correlation with what is going on in the Maldives in terms of renewable energy developments and what is going on in nearby massive economies like India, which has been experiencing energy shortages,” he said. “There is interest here even in the local population for renewable energy schemes, and we have some work ongoing here to that end. But as far as direct results go, we think that there stills needs to be a practical reference site here in the Maldives to show the applications of renewable energy technologies.”

In terms of business at the expo, Sizer said that several resort groups had been in contact over the last few days to discuss the possibilities of adopting renewable energy services such as off-grid wind technology.

As well as a potential hub for renewable energy development, the Maldives has continued to push its reputation as a high-end luxury destination.  As a result, the sourcing of goods like European cheeses, meats and other delicatessen specialities were well represented at the event.

One such supplier of these products is Deli United, which has combined a stand providing guests with fresh fruits from across the wider South Asian region, with matured Swiss cheeses and fine slices of meats usually experienced at the country’s resort properties rather than exhibit halls.

Whilst providing guests and exhibitors with combinations of fine cuts of deer with varieties of European cheeses, a company representative explained that the Maldives provided a unique market for high-quality foodstuffs.

“The market we are aiming for here in mainly the resorts, we have interest from local people, but in general they do not have the traditions of enjoying these sort of cheeses,” the representative said. “This is a very strong market, visitors spend a lot of money on food. With the products I have, I like to think of myself as something of a food missionary when it comes to my produce.”

Despite targeting the country’s resort industry, which was not subject to the same restrictions the country’s inhabited islands were in terms of banning the sale of alcohol and pork products, the company representative said he had tried to select a wide number of products like beef ham and duck pates for guests to sample at the event.

Beyond specialist products like cheeses, pate’s and meats, Kapila De Silva, Marketing Manager for Sri Lanka-based Sadaharitha Agri Farms and Exporters, said the Maldives also presented a strong market for more everyday items like fresh fruits and vegetables, considering the country’s limited food production output.

“Obviously you have a very luxury-focused market here, so of course, resorts will be expected to provide very high-quality fruits and vegetables to guests,” he said. “They expect the best-quality goods.”

Having attended the Hotel Asia Exhibition for the last few years, Kapila claimed that his company now worked with a growing number of resorts to provide a range of produce from more standards fruits and vegetables to specially developed products like square melons, which he added could also be embossed for individual properties.

“Our plantations in Sri Lanka allow us to provide a large amount of fresh produce,” he said. “Being so close to the Maldives,the country represents a very important market for us, with our low, medium range and higher altitude plantations, we really can supply a very large number of products.”

While Kapila claimed that recent political uncertainty had not seemed to dampen demand from the Maldives for fresh produce, he claimed that the company still faced challenges in supplying goods to the country.

“There are still some barriers here in the Maldives in terms of logistics. Basically we need to clear customs and have our products get out to the resorts as soon as possible.  At times this process can take up to seven or eight hours to have them processed.  This threatens the quality of our goods,” he said. “We would like to see more work conducted here in terms of logistical support as a number of resorts are not close by to the airport. Guests expect the highest quality products here in the Maldives, this includes fresh fruit and vegetables.”

Culinary challenge

The exhibition’s organisers added that beyond business relationships, equally important to the development of the Hotel Asia expo during the last ten years had been the culinary challenge, which is held alongside the trade show in the Male’ convention centre.

An estimated 35 chefs are taking place in this year’s event, which is divided into a number of categories to contest three main awards including ‘Best Culinary establishment’, ‘Top Maldivian Chef’ and ‘Most Outstanding Chef’.

Bruce Woolner, Operations Manager for Chef Middle East, a supplier working with a number of the country’s resorts, contended that the strong focus on food at the show -particularly through the culinary competition – was important for the ongoing development of the industry locally.

“It’s a very good way of engaging companies to take part, but also it’s way to positively talk up the industry in this country and that is something that is not done enough,” he said.

Husnie Rauf agreed that the competition was an important part of attracting the local and multinational resort operators to the event, with many locally-based chefs travelling to Male’ specifically for the event.

From the perspective of MECS, Rauf claimed that Hotel Asia continued to be the largest event of its kind for business in the Maldives.

But what prospects are there in the future for other major events?

Rauf added that after launching the Hotel Asia show back in 2000, a number of additional exhibitions targeting the local business community had been started up in the country.  These included a boat show that had been run by MECS up until 2008.

“We got to a point where there wasn’t a lot of investment in boats at the time due to a global economic downturn. We also used to run a construction-themed event in the country, but this hasn’t been held since 2009 again because of the economic climate,” he said.

“Right now we continue to manage the Hotel Asia exhibition and our education fairs. There continues to be strong interest for these services in the Maldives, particularly among Maldivians looking to study abroad.”

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STO to purchase three resort islands to generate dollars

State Trading Organisation (STO) has announced it will venture into the Maldives tourism industry in order to increase its access to foreign currency.

The STO is the Maldives’ state-owned importer, and is the primary supplier of general goods, fuel and pharmaceuticals to the Maldives. It also supplies aviation fuel to Ibrahim Nasir International Airport (INIA).

STO Managing Director Shahid Ali said the company needed to purchase “at least three resorts and one hotel”, to meet its demand for foreign currency at a time the country was facing a ongoing dollar shortage, according to newspaper Haveeru.

The Maldives grapples with a foreign currency deficit due to a heavy import-export imbalance. Goods from overseas must be purchased with foreign currency, but the Maldives has little ability to earn this outside the resort industry.

The industry typically pays salaries in local currency, while most of the its banking is conducted outside the country in financial hubs such as Singapore. The properties also charge directly in US dollars bypassing the rufiya altogether, a practice which is technically against the country’s monetary legislation but is unenforced by the central bank. As a result, the wider Maldives economy sees little of the dollars that tourists bring into the country, and importers must rely on the fluctuating blackmarket for rufiya-dollar transactions.

“We are trying to a find a way to earn the foreign currency we need without relying on another party for it,” Shahid Ali told Haveeru. “Venturing into the tourism industry is the way to achieve that. We need to own at least three resorts for this,” he said.

The STO board is currently reviewing resort islands for purchase, and a decision is yet to be made on which islands will be bought.

STO Spokesperson Ismail Sadiq had not returned calls at time of press.

The company is currently building a 5-star hotel on  Hulhumale under a contract with USA-based multinational travel company, Carlson Group. The hotel project started in October 2011, although the contract was signed between STO and Carlson in 2008. Shahid said at the time that the delay was due to financial constraints.

The STO was initially formed in 1946 as a fully state-funded business, in the name of Athireemaafannu Trading Agency (ATA), with the task of purchasing and importing essential food items in bulk to be distributed nationally via local traders and their own retail outlets. It was later expanded and rebranded as the State Trading Organisation.

The STO is not the first government entity to venture into the tourism industry. In February 2010 the Maldives Tourism Development Corporation (MTDC) – another public company investing in the tourism industry – paid US$3.5 million to end a long-running court dispute with former management of Herathera, Yacht Tours, after the company stopped paying rent and claimed the MTDC had failed to fulfil a contractual obligation to build a channel between the resort and the adjoining island of Hulhudhoo.

MTDC agreed to pay Yacht Tours the money to end the dispute due to spiraling costs: at one stage, 600 staff had been employed to look after 28 guests.

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