Sixty resort islands in limbo after political turmoil strikes CSR programme

The government has refuted local media reports that it is considering halting the lease of 60 islands award for resort development by the former administration.

The islands in question were to be leased under a Corporate Social Responsibility (CSR) tourism programme initiated by the former government. The programme faced heavy criticism from the start, especially from opposition figures now senior officials in the current government.

Critics alleged that the CSR programme was against the law as the islands were awarded in the absence of an open bidding system, and had favored Maldivian Democratic Party (MDP) members.

The National Planning Council (NPC) – formed by the previous government and currently “under review” – leased islands for resort development to interested individuals, with the condition they undertook a development project on an inhabited island, such as building water and sewerage systems.

The development project had to be completed to an “acceptable level” on an island of the government’s choice within an allocated time frame, before the resort would be leased for development. In addition, the resort would be owned by a joint-venture company formed between the state and the resort developer,  with the government holding a five percent share of the company.

The NPC had awarded contracts to at least 10 parties to develop 10 different islands. The fate of these contracts are still unclear as the potential resort developers await a decision by the government. The government, in turn, claim to be waiting for the Anti-Corruption Commission (ACC) to make a decision.

“The issue is not in our hands now. There are some legal issues to be addressed. Even the 10 islands with contracts might be cancelled. We will decide on it once the ACC gives its recommendations,” said the Minister of Tourism, Ahmed Adheeb.

Meanwhile,  local newspaper Haveeru on Monday reported a “prominent” tourism ministry official stating that the government had decided not to lease the islands awarded “without bids”, in line with the ACC’s recommendations on the issue. Around 60 of the awarded islands will no longer to be leased, according to Haveeru.

“We have decided to cancel the proposals of the islands without agreements. In addition, a decision pertaining to the islands where agreements have been made will be taken after the ongoing discussions with the ACC,” the official told Haveeru.

President of the ACC, Hassan Luthfy denied reports that the commission had specifically ordered the NPC to discontinue the CSR programme.

“During the former administration, we recommended the NPC award all projects within an open bidding system. It did apply to the CSR programme but we did not specifically ask for the CSR projects to be stopped,” Luthfy told Minivan News.

The ACC began investigating the CSR programme in May 2012 and a decision is yet to be made.

Speaking to Minivan News, member of the NPC and former Economic Minister Mahmoud Razee defended the CSR-programme.

“The  programme did not break the law. The tourism law allows two options by which resort islands can be leased: either through the bidding system or by the government holding a share of the company owning the leased resort,” said Razee.

He further claimed the CSR programme was more egalitarian and would enable more people to be involved in the tourism industry, rather than just those with access to large upfront capital.

“The programme was completely open for anyone to apply. It was conducted in a very transparent manner. It was also more efficient than the bidding system where people would just put down huge amounts of money and then later be unable to develop the resort. Even now there are about 60 islands awarded through bids that are still not developed,” he said.

“The CSR programme cuts down the initial costs for developers and gives more people the opportunity to own resorts,” Razee explained.

‘Sim’ Ibrahim Mohamed, one of the individuals awarded an island and under the CSR programme, agreed.

“According to tourism law there is no need for an open bid if the government has a share in the resort. The whole motivation behind the theme of the CSR programme was very noble. It was a very sound, well thought-out policy by the previous government,” said Ibrahim.

In contrast to the bidding system which “always favored people who already had money”, the CSR programme “made everyone equal in terms of the ability to enter the tourism industry as an owner,” he explained.

The CSR programme also opened a doorway for Small and Medium Enterprises (SMEs) to enter the tourism industry, said Ibrahim.

In addition, he said that leasing islands to resort developers in exchange for providing basic facilities on inhabited islands, such as water and sewerage system,s was “a very good way of doing it”, taking the country’s economic situation into consideration.

Asked  how the current limbo state of the CSR programme would affect investor confidence in the country, Ibrahim noted “well, in this instance, the investors ran away.”

“This government has been in power for over 100 days and still nothing has happened. We don’t know. We are waiting, the investors are waiting. So it is just money lost, it is opportunity lost. It’s not only investors’ confidence but also financial institutions such as banks that lend you money.”

Although the government has not reached a decision yet, it still remains skeptical about the CSR programme.

“I don’t think the people who got the resorts have the financial capacity to conduct the projects in the islands,” said tourism minister Adheeb. “There are no documents with any evidence of their funds.”