Tag: maldives news

MPs quiz finance minister about revenue raising measures

MPs on the budget review committee quizzed Finance Minister Abdulla Jihad yesterday about revenue raising measures proposed within the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

Briefing the committee yesterday (November 10), Jihad explained that MVR3.4 billion (US$220 million) in additional revenue is anticipated from raising import duty rates from July onward and introducing a ‘green tax’ for tourists.

Additionally, acquisition fees from investments to special economic zones (SEZs), income from the home ownership programme, and leasing 10 islands for resort development would help raise the forecast revenue.

The minister also told the committee that domestic debt had reached about MVR20 billion (US$1.2 billion)- 39 percent of GDP -making the rolling over of T-bills “a nightmare”.

The government was considering increasing custom duties “mostly for luxury items, or items that are harmful to the environment or health,” he said.

The cabinet’s economic council has not yet finalised the import duty or tariff revisions, Jihad noted, though he did reveal that the items under consideration include tobacco, perfume, and vehicles.

Tariffs for tobacco would be raised from the current 150 percent to 300 percent while duty would be raised from 100 to 150 percent for cars, and zero to 10 percent for perfume, Jihad said.

Asked if higher custom duties would lead to higher prices, Jihad said the impact on the inflation rate would have to be studied, which would take time to complete.

Jihad stressed that the government has ceased deficit monetisation – borrowing money from the central bank to finance the deficit – in May, as a result of which the inflation rate was reduced to 1.4 percent.

In April, parliament approved import duty hikes for a range of goods proposed by the government as a revenue raising measure.

Meanwhile, the forecast for income from SEZ acquisition fees is US$100 million, Jihad revealed, which is expected by August 2015.

A further MVR400 million (US$25.9 million) is forecast from leasing and sale of land from across the country, Jihad said – in particular, plots from unused reclaimed land in various islands.

The state-owned land designated for leasing or sale falls under three categories, he explained, which were residential, commercial, and industrial.

Moreover, 10 new islands would be leased next year for resort development, he continued, which would generate income for the government in the form of acquisition costs.

As an incentive or relief for new resorts with development stalled due to financial constraints, Jihad said the government would waive import duties for construction material or capital goods next year.

Tourism Minister Ahmed Adeeb revealed yesterday that a green tax of US$6 per night would be introduced in November 2015 and guest houses would be exempt from the tax.

Jihad said the income from the green tax would be used for water, sewerage, and coastal protection projects.

Of the proposed revenue raising measures, import duty revisions and introduction of a green tax would be subject to parliamentary approval, which the finance minister hoped would be granted as the budget was passed.

Legislative compromises to new revenue measures led Jihad to express fears in August that the predicted state deficit for 2014 would more than double in 2014.

State debt

The outstanding stock of treasury bills (T-bills) is currently MVR10 billion (US$648.5 million), said the finance minister.

In his budget speech last week, Jihad observed that the state’s debt would reach MVR31 billion (US$2 billion) or 67 percent of GDP by the end of 2014.

Expenditure on state employees in 2014 would reach MVR15.8 billion (US$1 billion), Jihad observed, while MVR3.2 billion (US$207 million) would have been spent on subsidies and social security benefits.

Consequently, the government was facing serious difficulties in “managing the state’s cash flow and financing the budget” as well as securing loans for budget support, Jihad said.

According to the central bank, the total outstanding stock of government securities was MVR13.6 billion (US$881 million) at the end of September.

Spiralling debt is threatening “the economy’s health”, Jihad said yesterday, with the rolling over T-bills proving to be difficult as the ministry has to plead with banks for extension of repayment periods.

“For example, if MVR600 million matures this week and there is MVR700 million in the public bank account, if the MVR600 million is rolled over there’ll be MVR100 million. How can we run the state with that? It can’t be done,” he explained.

The solution was raising additional revenue by utilising resources such as uninhabited islands, he continued, and appealed for cooperation from parliament. Additionally, the government was trying to extend the periods for repayment of debt.

The interest rate for T-bills is currently 7.5 percent, Jihad said, down from 10 percent before the current administration took office.

“This year we estimate that MVR1.2 billion worth of T-bills have been used by the state for finances. In 2015, it will be MVR440 million,” he noted.

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US$6 green tax to be introduced from November 2015, says tourism minister

The new green tax for tourists will be introduced from November 2015 at a rate of US$6 per bed per night, Minister of Tourism Ahmed Adeeb has revealed.

Speaking at a press conference held by the cabinet’s Economic Council today, Abeeb said that guest houses would be exempt from paying the new tax in order to reduce the impact on small and medium businesses.

“Since 2013 the guest house venture has been on the rise. We do not want to hinder the development of these businesses so we have decided to exempt guest houses from paying the tax,” said Adeeb, addressing concerns raised by the opposition Maldivian Democratic Party (MDP) earlier in the day.

The introduction of the new tax is to come 11 months after the abolition of the bed-tax, which will continue to be charged at US$8 a night until the end of this month.

Some resort owners have suggested that the combination of the bed tax with the rise in T-GST to 12 percent this month has affected bookings, though Adeeb today vowed there would be no further increases in T-GST during the government’s current term.

The T-GST rise came after urging from the IMF, which has suggested that the previous rate of 8 percent was low for a tourism industry as profitable as the Maldives’.

Adeeb said today that the council does not believe the green tax will hinder the demand from tourists – especially from Europe – who will become “champions” of the Maldivian environment by paying the tax.

2013 saw a record 1.3 million tourists spend just over  7 million bed nights in the country, although the country’s macro economic stability has remained a concern.

The tourism minister has previously said that revenue generated from the new levy would be spent on resolving the waste management issues in the greater Malé region – an issue made more pressing with the Economic Council’s recent termination of the Tatwa waste management contract.

Adeeb also revealed the council’s plans to remove import duty on construction material needed for the refurbishment of resorts, thereby stimulating resort development which he said would provide numerous employment opportunities for the youth.

President Abdulla Yameen last week announced that five new resorts would begin construction in 2015 in the northern atoll of Haa Dhaalu, which currently has none in operation.

Also speaking at the press conference, Minister at the President’s Office Mohamed Hussain Shareef said  the government was seeking to begin the re-development of Ibrahim Nasir International Airport midway through next year.

“Beijing Urban Group and Maldives Airports Corporation Limited has finished the drawings of the airport and are in the process of submitting the proposal to China’s Exim bank in order to finance the project,” explained Shareef.

Shareef also re-iterated the government’s plans to start work on the proposed Malé-Hulhulé bridge in the year 2015, before opening the bridge in 2017.

“The bridge survey team is almost done with the feasibility study and it will be submitting its reports to the Chinese Government who will then finance the bridge through grant-aid and low interest loans,” said Shareef.

Agreements to develop the INIA and to promote the Malé-Hulhulé bridge were signed during Chinese President Xi Jinping’s visit to the Maldives as part of his South-Asian tour in September.

During his visit, President Xi also officially requested that the Maldives participate in China’s 21st Century Maritime Silk Route, before journeying to India as part of his tour of the region.

Shareef concluded the press conference by commenting on what the governing Progressive Party of Maldives has described as attempts by the opposition to spread misinformation regarding comments made by the foreign minister on Sino-Indian discussions about the silk road project.

After Dunya Maumoon’s comments to the Majlis last week appeared to suggest that Indian had discussed joining the project with President Xi, the Indian government released a statement strongly denying such talks had occurred.

Shareef warned the MDP – which has today announced its intention to table a no-confidence motion against the foreign minister – that it would have to answer to the international community which had been informed of its attempts to sow discord.

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MDP criticises proposed 2015 state budget as “aimless”

The proposed MVR24.3 billion (US$1.58 billion) 2015 state budget is not aimed at delivering the promises made in the Progressive Party of Maldives (PPM)’s manifesto, says the Maldivian Democratic Party (MDP).

MDP Vice-Chair Ahmed Ali Niyaz said today that the party’s budget committee had researched the proposed budget and concluded it to be “aimless”.

“The current government has submitted a budget like those for Maumoon’s regime which serves for administrative purposes alone,” said Niyaz.

Niyaz added that the MDP had submitted programme budgets under a strategic action plan during its time in office.

The party’s MP for the Gan constituency, Fayyaz Ismail also accused the government of manipulating the methodology for calculating the country’s GDP in order to show a double digit figure.

“Given the high expenditure of the budget, if the income generating measures fail, the budget deficit might increase to MVR5 billion (US$330 million),” said Fayyaz today.

While presenting the 2015 budget to the parliament for approval last week, Finance Minister Abdulla Jihad stated that the estimated budget deficit 2015 would be MVR1.3 billion (US$84 million).

“If the government fails in gaining supplementary loans it might have to resort to printing money which would severely harm the country’s economy,” continued Fayyaz.

The printing of money to cover government expenditure has elicited concern from successive Maldives Monetary Authority governors, as well as the World Bank.

Jihad had noted that MVR3.4 billion (US$ 220 million) would be raised from new income generating measures including the introduction of a green tax, and acquisition fees from the investments coming under the new Special Economic Zones (SEZ) Act.

MDP Budget Committee Chair, Hussain Amru today called such expectations “unrealistic”.

“If the government is looking to raise MVR1.5 billion (US$100 million) as acquisitions fees at a rate of 10 percent of the total investment, it suggests that the government expects MVR15.3 billion (US$ 1 billion) in investment,” stated Amru .

The single biggest investment in the country to date was the ill-fated MVR7.6 billion (US$ 500 million) deal with India’s GMR group for the development Ibrahim Nasir International Airport (INIA) in 2010. A Singapore court of arbitration is currently evaluating the amount owed by the government for the wrongful termination of the deal in November 2012.

The MDP today listed the programmes announced by the government that were not accounted for in the 2015 budget, which included the proposed Kulhudhuhfushi airport, subsidies for fishermen and agricultural workers, and the promised flats for newly wedded couples.

“MVR100 million (6.51 million) has been allocated for conducing the feasibility study of the Malé-Hulhulé Bridge,” said Amru. “However the government informed us that the feasibility study was conducted with grant aid from the Chinese government. Where is the 100 million going to?”

The party said they had submitted their report to the parliamentary group, which would raise these concerns during the budget review process.

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Police officers testify against February 8 arson suspects

Eight police officers testified at the Criminal Court today against several defendants accused of setting fire to a police station in Addu City on February 8, 2012.

At today’s hearing, the police officers reportedly identified the accused and testified that they had thrown stones at police officers blocking the causeway between Feydhoo and Gan and had broken through police lines before entering Gan police station.

The officers also claimed some of the defendants had bragged about setting the station on fire.

More than 80 people from Addu City are currently on trial – charged with terrorism – for acts of arson on February 8, 2012, which saw police vehicles, courts and police stations torched in the southernmost atoll.

Some 89 individuals from the island of Thinadhoo in Gaaf Dhaal atoll are also facing terrorism charges. The atoll council office, court building, police station and several police vehicles were set on fire in Thinadhoo on February 8.

The Criminal Court yesterday issued a warrant ordering police to hold 12 defendants from Thinadhoo and one from Gahdhoo – including Thinadhoo island council member Abdulla Saneef – in detention pending the outcome of the trial after they failed to attend a previous hearing.

The accused were presented to court under police custody yesterday.

Chief Judge Abdulla Mohamed reportedly asked the accused to submit their justifications in writing for the court to reconsider the decision.

Following its investigation into the nationwide unrest and violence on February 8, the police forwarded over 100 cases to the Prosecutor General’s office, requesting that 108 individuals be charged with terrorism.

Acts of arson are considered terrorism under the Terrorism Prevention Act enacted by the administration of former President Maumoon Abdul Gayoom. The offence carries a jail term of between 10 to 15 years.

Meanwhile, Police Commissioner Hussain Waheed and Chief Inspector of Upper South Division Mohamed Basheer were summoned to the court last night to explain why police failed to execute an earlier order by the court to bring suspects to face trial.

The court has previously said it was facing difficulties summoning defendants from the southern atolls as well as housing and feeding the accused. Under the Judicature Act, terrorism trials must be conducted at the Criminal Court in Malé.

Speaking at parliament today, Progressive Party of Maldives MP for Thinadhoo North Saudhulla Hilmy accused opposition-aligned private broadcaster Raajje TV of inflaming passions and inciting violence by falsely reporting on February 8 that MDP MPs had been killed by the security forces.

Raajje TV has since denied the allegations.

February 8

In a press release issued on September 18 after the hearings were scheduled – following a hiatus of over a year – the opposition Maldivian Democratic Party (MDP) contended that the trials against dozens of the party’s members and supporters were politically-motivated acts of intimidation.

The party also accused the government of threatening to prosecute persons who participate in MDP activities.

The press statement also noted that police officers who committed crimes on February 6, 7, and 8 were not being prosecuted.

On February 8, 2012, riots spread across the country following a brutal crackdown on an MDP march in the capital.

Thousands of MDP supporters took to the streets of Malé in a protest march after former President Mohamed Nasheed declared his resignation the previous day had come “under duress” in a “coup d’etat”instigated by mutinying police officers of the Special Operations (SO).

Following an investigation, the Human Rights Commission of Maldives (HRCM) concluded that the heavy-handed police crackdown on the MDP walk was “brutal” and “without warning” while the “disproportionate” use of force left dozens of demonstrators injured and hospitalised.

Al Jazeera filmed parts of the crackdown, reporting that “police and military charged, beating demonstrators as they ran – women, the elderly, [with] dozens left nursing their wounds”. The BBC meanwhile reported “a baton charge by police on crowds gathered outside one of the main hospitals.”

Amnesty International warned that failure to prosecute police officers accused of human rights abuses and “serious failings in the justice system entrenched impunity”.

Moreover, former PIC Chair Shahinda Ismail told Minivan News in September 2012 that a staff sergeant caught on tape kicking a fallen demonstrator “was promoted after this incident.”

In February this year, Shahinda told Minivan News that detainees arrested in Addu City on February 9 were “forced to walk on smoldering coals”.

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Bill proposed to exempt domestic air travel from T-GST

MPs today debated amendments submitted on behalf of the government by the Maldives Development Alliance (MDA) MP Mohamed Ismail to exempt domestic air travel or ticket prices from Tourism Goods and Services Tax (T-GST).

The amendments (Dhivehi) to the GST Act of 2011 also proposed exempting goods sold at shops in resorts, guesthouses, and hotels that are exclusively for staff from the 12 percent tax rate.

A T-GST hike from eight to 12 percent – approved by parliament in February as part of revenue raising measures proposed by the government – came into effect on November 1.

Subsequently, local airlines Maldivian and Flyme imposed a 12 percent sales tax on ticket prices and increased airfare by about MVR32 per ticket.

“Now a [ticket] to a flight to Addu has gotten more expensive than a flight to Colombo. This is not, in any situation, how it should be priced,” former President Mohamed Nasheed told local media following the tax rise.

Presenting the legislation at today’s sitting of parliament, MP Mohamed Ismail said the purpose of the amendment bill was to exempt Maldivians from the tax hike.

While the bill was submitted on October 22 before the T-GST rise came into force, the MP for Haa Alif Hoarafushi noted that its inclusion in the agenda was slightly delayed.

The bill also states that any visitor who enters the country on a tourist visa shall be considered a tourist.

If the bill is passed into law, the GST rate for domestic airfare would be six percent.

The Maldives Inland Revenue Authority (MIRA) had anticipated MVR34 million (US$) in additional income as a result of the tax hike.

All MPs who spoke during the preliminary debate were in favour of the revision and the T-GST exemption for domestic air travel.

However, opposition Maldivian Democratic Party (MDP) MPs criticised the majority party or ruling coalition for approving the tax hike in February without the exemption for locals.

As the bill would have to be reviewed by committee before it could be passed, MDP MP Ali Nizar said the government had ample time to amend the law before November.

Jumhooree Party MP Faisal Naseem also noted that MPs would have known in February that T-GST would be charged for domestic airfare and goods sold for tourism workers.

“What I want to note today is, would we not have to propose an amendment again for a six percent refund?” the MP for Kaashidhoo asked.

If MPs wished to reimburse locals for the six percent extra charge, Faisal suggested adding a provision in the amendment bill during the committee stage.

He also called on MPs to expedite the legislative process and pass the amendment as soon as possible.

Following the preliminary debate, the bill was accepted unanimously with 60 votes in favour and sent to the whole house committee.

Introduced in 2011, T-GST generated around MVR2 billion (US$129 million) between January and September this year – equal to just under 24 percent of all government revenue.

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Vnews editor suspended for assaulting female employee

Vnews editor Adam ‘Mundoo’ Haleem has been suspended for assaulting a female employee yesterday (November 9), reports local media.

Vmedia CEO Mohamed Asif ‘Mondhu’ confirmed to local media that Haleem has been suspended pending the outcome of an investigation.

CCTV footage of the assault surfaced on social media today appearing to show Haleem grab and shove a female employee before being restrained by others at the scene.

The female employee reportedly sought treatment at ADK hospital for minor injuries.

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India to conduct third medical camp this year, in Huvadhoo atoll

Indian doctors arrived in the Maldives yesterday (November 9) in order to conduct medical camps in Huvadhoo Atoll.

Four specialists from the Indian Defence Force will be conducting the camps in Gaafu Alif Villingili and Gaafu Dhaalu Thinadhoo between November 10 and 16.

“This will greatly benefit the people of these islands and will assist in providing specialist medical assistance to the people of Maldives,” read a press release from the Indian High Commission in Malé.

This is the third medical camp organised by India this year, with previous visits bringing medical services to more than 3000 people. Additionally, an’eye camp’ conducted during the India- Maldives ‘Dosti-Ekuverikan’ friendship week offered free consultations to more than 500 people.

This team comprises 5 specialist doctors – with members from Malé’s Senahiya military hospital – in fields including Orthopaedics, Internal Medicine, ENT, Paediatrics, and Obstetrics & Gynaecology.

As well as offering consultations in regional health centres, the team will conduct minor operative procedures if needed.

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Over 8,500 forms submitted for home ownership programme

Around 8,700 people have submitted application forms for the government’s home ownership programme while tokens have been issued to a further 17,000, housing minister Dr Mohamed Muiz revealed yesterday.

Speaking at a press conference about the ministry’s achievements during the past year, Muiz said application forms would be accepted until February.

The ministry would assess the applications and make home visits to determine standard of living, he added.

The government announced the ‘Gedhoruverikan’ social housing scheme in February.

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PPM responds to foreign minister silk route controversy

The Progressive Party of Maldives (PPM) has responded to the Maldives Democratic Party’s (MDP) criticism of foreign minister Dunya Maumoon’s remarks regarding India’s participation in China’s Maritime Silk Road initiative.

In a media statement released today, the PPM accused the opposition of twisting the story in order to harness attention from the international community.

The party also alleged that MDP is trying to divert attention from the party’s achievements during its third anniversary and from the one year anniversary of President Abdulla Yameen’s term.

MDP condemned Dunya for “intentionally” providing false information about the Chinese project when questioned by the parliament Maldives involvement in the project.

When asked about the potential impact of the scheme on India-Maldives relations, Dunya told the parliament last week that India had also discussed participating during the recent state visit of Chinese President Xi Jinpeng.

However, Indian Diplomats in Malé promptly refuted the claim, releasing a statement containing comments from the Indian External Affairs Ministry which denied such talks having taken place.

Meanwhile, the Ministry of Foreign Affairs released a statement today seeking to clarify any confusion caused by these remarks, saying that Dunya had “noted her concern if her choice of words had led to any confusion”.

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