Tag: MATI

MP reveals plans to build 600-room resort

Ruling coalition MP and tourism tycoon Ahmed Siyam has announced plans to build a 600-room resort on the island of Dhigurah in northern Noonu Atoll.

“On completion, the resort will be the largest tourism offering in the Maldives, creating more than 2,500 jobs for the local Maldivian community,” the MP’s company, Sun Siyam, said.

The resort on Dhigurah will have 14 different room categories, 15 food and beverage outlets as well as an underwater restaurant.

Siyam is also to open a second resort in Sri Lanka’s Kalpitiya.

“The Maldives has a form of home-grown service culture and industry know-how that is currently not being fully utilised to its full potential domestically, and certainly not on the international stage. Just like the well-known Swiss, Indian and Thai forms of hospitality, Maldivian hospitality can create desire and demand in any region,” he said.

Siyam also sits on the board of the Maldives Association of Tourism Industry.

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Parliament approves government’s revenue raising measures

Parliament today passed three bills submitted by the government to raise additional revenue anticipated in the 2014 state budget.

The revenue raising measures approved today include hiking the Tourism Goods and Services Tax (T-GST) from eight to 12 percent in November, reintroducing the discontinued US$8 bed tax starting this month, and requiring resort lease extension payments to be made within two years.

While the two amendments to the Tourism Act were voted through 38-18, the amendment to the Goods and Services Tax Act was approved 39-18. The changes will take effect once signed into law by the president.

The passage of the amendment bills was greeted with applause from government-aligned MPs.

MPs of the opposition Maldivian Democratic Party (MDP) voted against all three pieces of government-sponsored legislation, contending that the tax hikes would adversely affect the tourism industry.

“Numbers will not match”

The government had initially proposed collecting resort lease extension fees within three months, collecting bed tax throughout this year, and raising T-GST in July.

However, the parliamentary subcommittee that reviewed the legislation consulted the Maldives Association of Tourism Industry (MATI) last week and recommended revising the government’s proposals.

Representatives from MATI opposed continuation of the bed tax alongside the T-GST increase.

Appearing before the subcommittee, MATI Secretary General Ahmed Nazeer also questioned the practicality of collecting resort lease extension fees upfront.

Only 17 out of more than 100 resorts offered the opportunity by the administration of former President Mohamed Nasheed to extend leases with a lump sum payment were able to do so, Nazeer said.

Resort owners had amended their lease agreements to pay extension fees in installments during Dr Mohamed Waheed Hassan’s administration, Nazeer noted, and revising agreements for a third time could present legal challenges.

Government-aligned Jumhooree Party Leader Gasim Ibrahim – who chaired the subcommittee – meanwhile told local media following the revisions that the bed tax and T-GST hike would overlap in November, after which the former would be discontinued.

The decision was made to compensate for the loss of income from the bed tax in January, the business magnate and resort owner explained.

Finance Minister Abdulla Jihad told local media last month that the Majlis’s failure to extend the bed tax would result in a revenue shortfall of MVR100 million (US$6 million) a month.

Moreover, in the wake of the subcommittee’s revisions, Jihad warned that the projected MVR 3.4 billion (US$224 million) in additional revenue – which accounts for 18 percent of the record MVR17.95 billion budget passed for this year – could not be realised in full due to the changes.

Following remarks by Progressive Party of Maldives MP Moosa Zameer at the subcommittee last week – suggesting that pro-government MPs supported abolishing the bed tax in favour of increasing T-GST – Jihad told Minivan News that the government’s stance had not changed.

“It has not changed. And if the government does not go on with the bed tax, the numbers will not match in the budget,” he said.

Meanwhile, parliament yesterday accepted for review amendments submitted by the government to revise import duties.

In addition to raising tourism taxes and custom duties, other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

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PPM MPs support abolishing tourism bed tax

Deputy leader of the ruling Progressive Party of the Maldives’ (PPM) parliamentary group Moosa Zameer has supported abolishing tourism bed tax if the Tourism Goods and Service Tax (T-GST) is raised from 8 to 12 percent.

Reintroducing the US$8 tourism bed tax, which was discontinued on December 31, 2013, is among the raft of revenue raising measures proposed by President Abdulla Yameen.

However, speaking at an eleven member sub committee set up to review the government’s revenue raising measures, Zameer said that government aligned MPs now believed bed tax should be abolished if T-GST were to be increased.

Finance Minister Abdulla Jihad has denied any change in the government’s stance.

“It has not changed. And if the government does not go on with the bed-tax, the numbers will not match in the budget,” Jihad told Minivan News.

According to the Madives Tourism Act, bed tax must be abolished within three years of the introduction of T-GST. The Finance Ministry has said discontinuation of bed tax will cost the state MVR100 million (US$ 6.4 million) every month.

The government expects MVR3.4 billion (US$ 224 million) from revenue raising measures. These also include revision of import duties, raising airport departure charge for foreign passengers from US$ 18 to US$ 25, leasing an additional 12 islands for resort development, introducing GST for telecommunication services, and collecting resort lease extension in advance.

Government aligned MPs requested the People’s Majlis hold an extraordinary session during the ongoing recess, contending that failure to pass the revenue raising measures will hamper the implementation of the 2014 budget.

Meanwhile, the Maldives Association for Tourism Industries (MATI) has questioned the practicality of collecting resort lease extensions in a lump sum.

Speaking at the sub committee yesterday, Secretary General of MATI Ahmed Nazeer said only 17 out of more than one hundred resorts had paid resort lease extension fees upfront during former President Mohamed Nasheed’s administration.

Nazeer pointed out that the Civil Court had said the government could not ask for resort lease extensions upfront during Nasheed’s tenure.

Further, resort owners had amended their agreements to pay lease extension in installments during President Dr Mohamed Waheed Hassan’s administration, and as such it would be difficult to amend legislation, Nazeer said.

Then Governor of Maldives Monetary Authority (MMA) Fazeel Najeeb at the time opposed many of those measures, arguing that asking resort owners to pay lease extension fees upfront was robbing the state of future revenue for a “temporary benefit.”

Opposition Maldivian Democratic Party (MDP) MPs said changing agreements could reduce investor agreement in the country.

MDP has described the government’s revenue raising measures as excessive.

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Discontinued tourism bed tax will cost state 10 percent of revenue

The People’s Majlis’ failure to extend the country’s tourism bed tax before recess will result in losses of MVR100 million a month, the Finance Minister is reported to have told local media.

As of the start of 2014, the tourism bed tax taken under the Maldives Tourism Act of 1999 will be discontinued because of a deadline added to the act during its second amendment in 2010.

Article 35 – D of the amended act states that within three years of taking TGST (Tourism General Services Tax), the US$8 tourism bed tax per person per night shall be discontinued.

As the TGST was introduced with the year 2011, the current deadline came to pass at 12am this morning.

Quoting the Deputy Commissioner General of Maldives Inland Revenue Authority (MIRA) Hassan Zareer ‘Haveeru‘ has reported that this will result in a reduction of MVR1 billion – or ten percent of annual state revenue. He said the issue had been brought to the government’s attention. Minister of Finance Abdulla Jihad was quoted as saying that this change would incur a loss of approximately MVR100 million per month from the state cash flow.

On 9 December 2013 MP Abdul Aziz Jamal Abubakr, proposed an amendment to the act – on behalf of the government – extending the deadline for another year. However, it was not passed when the Majlis went to recess with the final sitting of the third session on 30 December 2013. The next session of the Majlis will begin on 1 March 2014.

MIRA statistics reveal that  from January – November 2013 the tourism tax accounted for 9.6% (MVR787,340,577) of the total revenue collected by the authority. Within the same period tourism land rents contributed 9.8%, and TGST 27.3% of the total revenue.

On 29 December the Majlis passed a MVR17.95 billion (US$1.16 billion) national budget, despite concerns from the public and various organisations. The central bank Maldives Monetary Authority (MMA) warned that if proposed revenue raising measures in it were not implemented, the budget could not cater for even the recurrent expenditure. The authority anticipates that the resulting budget deficit for 2014 could potentially increase from MVR886.6 million to 4.4 billion (11% of GDP).

The International Monetary Fund (IMF) also proposed the implementation of a number of measures to raise revenue and reduce spending.

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Introducing rival seaplane operators vital for tourism: MATATO

The Maldives Association for Travel Agents and Tour Operators (MATATO) feels it is imperative that competition be introduced to the country’s seaplane industry to assuage fears that the resulting monopoly has negatively hit tourism.

MATATO President Mohamed Khaleel has alleged that the sale of both Trans Maldivian Airways (TMA) and Maldivian Air Taxi (MAT) to US-based private equity fund Blackstone in February of this year has already led to increased prices for guests and tour operators.

“We need to find a competitor to [Blackstone],” said Khaleel.

The merged company now operates under the TMA brand.

Several major hospitality groups operating in the country wrote to the Maldives Association of Tourism Industry (MATI) in August claiming their “worst fears” were being realised regarding the monopoly on the country’s seaplane services.

“You are of course aware that ‘The Blackstone Group’s’ recent entry into the market has had the effect of eliminating competition and creating a monopoly in the charter seaplane market in the Maldives,” wrote the CEO of a major multinational operating in the Maldives.

“We were concerned from the outset about the potential disruptions this could cause in the market and have been monitoring the situation closely.”

In the letter, the company said it was particularly concerned at several contractual points it alleged were being “forced” upon operators by TMA as a result of the seaplane monopoly.

At time of press, Minivan News was awaiting a response from both Tourism Minister Ahmed Adheeb and TMA  to the allegations raised in the letter.

MATATO concerns

Aside from the impact of the increased costs being passed on to travel agents and consumers, MATATO President Khaleel alleged operators had not been receiving the same levels of support from the seaplane operator under Blackstone in order to promote the industry.

“For instance, we try to run [familiarisation] trips for journalists as part of promotion efforts for the country as a destination, every year in the past we used to get complimentary seaplane services [for promotional purposes],” he stated.

Pointing to key developments in the Maldives business sector in recent years, Khaleel said that introducing competition to the country’s communications and telecoms sector had helped lead to positive changes in price and services since the introduction of private competitors.

He expressed confidence that there was sufficient finance and know-how within the local aviation industry to try and establish a new seaplane operator locally.

Khaleel stressed that although the emergence of a growing number of domestic airports across the country was providing alternative transport options to using seaplanes, the best solution would be to encourage competitive pricing in the market by encouraging competing operators.

“There are multiple people around who can afford this to try and establish fair competition,” he added.

Blackstone “treated us well”: guesthouse operator

Meanwhile, one small hospitality group providing guesthouse accommodation in Noonu Atoll, which has recently renewed an agreement for seaplane services, confirmed it had faced successive rise in costs for the use of seaplane services over the last 12 months for a one way journey from the capital.

A one way seaplane flight to Noonu Atoll per traveller earlier this year rose to US$300 from US$260. The cost per head recently rose again to US$375 under its latest agreement signed within the last month, the operator added.

According to the guesthouse manager, the increased rates had not drastically impacted upon its operations as the property had worked with a specialist European tour operator to bring in groups of travellers – the costs therefore being absorbed into a wider package rate.

Outside of costs, the operator stressed that transport – particularly for the country’s fledgling independent travel market – was a “big issue” for their guesthouse, with the prospect of being priced out of using seaplanes potentially creating long-term difficulties for business.

“We were hoping that they would not raise the seaplane rates too much, and they didn’t,” the guesthouse manager added. “We would have otherwise had to use a recently opened domestic airport nearby, but this would be such a hassle requiring hiring a speedboat for further transportation. [The seaplane] is easy, smooth and elegant for us.”

The operator stressed that, owing to the costs already associated with using seaplanes compared to other forms of transport, its guests usually only took a one-way flight to the property itself with alternative transport arranged by sea as part of the experience.

The guesthouse manager added that seaplanes also gave an additional exotic appeal to the country as a destination, describing one tour operator as being “astonished” after their maiden flight across the country’s skies using the services.

This appeal, the operator argued, was a major additional selling point of the current package offered to guests visiting the Maldives.

“A monopoly makes it much tougher to do business, so in the long-run, I would say it could be a bit scary for the industry,” the manager stated.

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Maldives on course to meet million tourist target as political uncertainty dominates global headlines

“The World Tourism Organisation (UNWTO) has said the Maldives will successfully welcome over one million tourists to the country this year, according to Tourism Minister Ahmed Adheeb.

The claims were made as the country’s ongoing political uncertainty comes under intense scrutiny by global media after the country’s judiciary – previously reported as being heavily politicised in a UN-sanctioned investigation – suspended polling scheduled for September 28,” reports Minivan News’ spin-off travel site, Dhonisaurus.

“Tourism Minister Adheeb, speaking after the country officially launched the international celebrations for World Tourism Day on September 27 from Kurumba Island Resort, said that current statistics – backed by the UNWTO – indicated that tourist arrivals would exceed one million visitors during 2013.

The Maldives narrowly missed out on its stated aim of bringing one million visitors to the country last year, citing the impacts of global media covering the controversial change of government, an event which followed a mutiny by sections of the police and military.

The UNWTO launch event was attended by Adheeb, Defence Minister Mohamed Nazim and President Dr Mohamed Waheed, who spoke of the potential dangers the Maldives faced as a result of climate change – not least in terms of issues of water supply.

However, the celebrations, attended by senior UNWTO figures, were overshadowed by international media reports of “political chaos” in the country, and talk of potential disruption to the lucrative resort industry as a result of a 5,000 strong workers’ union pledging prolonged strike action.

The action was pledged in response to a Supreme Court decision on September 23 to indefinitely suspend the ongoing presidential election over allegations of voter irregularity, a decision that sparked global concern from international actors that had praised the voting process earlier this month.

Despite the strike pledge, tourism industry operators speaking to Dhonisaurus – including properties directly linked to presidential candidates placed second and third during voting on September 7 – said it had nonetheless been business as usual for the country’s resorts this week.

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Nasheed calls for tourism workers to strike should election be delayed

Former President and Maldivian Democratic Party (MDP) presidential candidate Mohamed Nasheed has called on tourism workers to strike, should run-off elections scheduled for September 28 be delayed.

Following Nasheed’s appeal, the Maldives Association for Tourism Industries (MATI) issued a statement warning of “irreparable consequences” to the Maldivian economy unless the election is expedited.

“It is absolutely important to expedite the election and settle the issue or else there would be irreparable consequences to the Maldives, and especially to tourism which is the back bone of the economy. Therefore, it is important for everyone to see the importance of this in the interest of the country at large,” said MATI Chairman M.U. Manik, one of pioneers of the country’s 40 year-old tourism industry.

The Supreme Court ordered the Elections Commission (EC) on Monday to indefinitely postpone run-off polls until it issues a verdict in an ongoing case filed by the Jumhooree Party, which placed third and is now seeking to annul the vote.

Nasheed emerged as the front runner in the first round of the polls with 45.45 percent (95,224 votes), followed by Progressive Party of Maldives (PPM) candidate Abdulla Yameen who received 25.35 percent (53,099 votes). JP candidate and resort tycoon Gasim Ibrahim narrowly missed out on the run-off with 24.07 percent (50,422), and contested the results at the Supreme Court alleging electoral fraud despite unanimous positive assessments of polls by local and international election observers.

“I call on tourist workers to strike if there is no election on Saturday. For everyone to strike. There is an election scheduled on Saturday – whether that election happens or not is in one sense in your hands and mine,” Nasheed told tourism workers, at an event on Monday evening to explain the party’s manifesto.

Secretary General of the Tourism Employees Association of the Maldives (TEAM), Mauroof Zakir, told Minivan News the organisation was holding discussions on whether to endorse Nasheed’s call.

“We are discussing whether TEAM as an organisation will back [Nasheed’s] call or leave it up to individual resort workers. We have to think about the consequences on employees’ jobs. Many resort workers are calling us and are saying they are willing to go on strike, but in such a way that resorts continue to operate,” Mauroof said.

The tourism industry is indirectly responsible for upwards of 70 percent of the Maldives’ GDP, and a substantial majority of Maldivian resort workers support the MDP.

Results from resort ballot boxes in the first round revealed overwhelming support for the party, even at many properties owned by Nasheed’s political opponents such as Vice President Waheed Deen’s Bandos Island Resort (51 percent MDP).

The trend was particularly notable at prominent international chains in the luxury tourism sector, famous for providing relaxing and idyllic escapes for honeymooners, including Sheraton Maldives Full Moon Resort and Spa (58 percent MDP), Dusit Thaani Maldives (73 percent MDP), Conrad Maldives Rangali Island Resort (62 percent MDP), and One and Only Reethi Rah (75 percent MDP).

Tourism Minister Ahmed Adheeb has meanwhile told local media he will not allow politicians to sacrifice the tourism industry and its workers, and appealed to staff not to strike.

“They plan and involve the tourism industry every time there is political turmoil, every time things do not happen as they want. They called for a tourism boycott in international media. There were effects from that. We are seeing the same thing now. We cannot allow any politician to involve the tourism industry in politics. We cannot allow politicians to sacrifice the tourism industry and its workers every time things are politically turbulent,” he told newspaper Haveeru.

The Supreme Court will be hearing closing arguments this evening.

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Q&A: Former Secretary General of MATI ‘Sim’ Mohamed Ibrahim

Former Secretary General of Maldives Association of Tourism Industry (MATI) ‘Sim’ Mohamed Ibrahim stepped down from his position in December 2012, having held the post for the last 15 years. Prior to his work at MATI, Sim held various positions within the tourism industry, even working at Television Maldives as the Chief of News and Current Affairs.

Luke Powell: The Tourism Ministry has put a lot of emphasis on achieving one million tourist arrivals for 2013, how important is this target and is this the right way to go about measuring success in the industry?

Sim Mohamed Ibrahim: There are many ways of measuring tourism. The most important of those measures is in terms of yield, as in what you have left after your expenses. I think there is a big challenge at the moment in this area. Despite resorts being very full, there are a few companies relying on Chinese tourists, and while tourists from China are good in the sense of keeping numbers up, in terms of yield, it’s not good.

It’s very expensive to run the resorts and I think we are not doing as well as we should be. Last year was not so good, we were able to keep the numbers fairly high but they were again mostly Chinese. It’s not really about the numbers, what we should have is average occupancy at good rates, however, we are finding that difficult to maintain as we now have to bring down the rates, offer discounts, and give special prices, to make up for the numbers being down.

The one million tourists mark is always good in terms of marketing and public relations as it is a nice big number. It keeps the momentum up and is very good psychology. But it’s not such a huge thing now.

LP: In your time at MATI, what developments did you oversee and were there ever any difficulties in carrying out your role?

SMI: My time was purely administrative. Our main concern at the time was trying to get the best deal for people who invested in the tourism industry and worked in the industry.

My main role was to try and keep people together and to push for common goals. We worked with the government and parliament, which was not easy. We found out that in parliament you have people from different parties and people with different viewpoints and motivations. It turned out that working with parliament was always difficult, whereas with the government it was easy.

With [former President Mohamed] Nasheed it was a lot easier to work, as he was someone very well known and familiar to us. He had his moments, he would sometimes stick to something and not let go, but usually we found we could negotiate and he in turn would talk to his cabinet and to his group we would be able to come to compromise.

LP: You said that working with parliament was not always so easy, what difficulties were there?

SMI: Some issues we couldn’t really agree on, some people wanted to ban alcohol from the country, but tourists drink it like water. It’s like us with coffee and tea. So how do you work with people like that? It becomes impossible.

Even with the economic issues, there are people who have the perspective that the people in the Tourism Ministry make too much money and that the government should be taking more from them.

They don’t really understand the workings of the ministry, running costs, investments costs and the facilitation of all these things. It’s like a normal business, but there is an idea in the country that the tourism ministry is rolling in the stuff. There are bills to pay, loans to pay and staff to pay, it’s very hard running tourism in this country.

LP: Would you say that attitude still exists? Earlier this year there was criticism from MATI over the decision to allocate just MVR 20 million from the 2013 budget for tourism promotion, when the tourism ministry had requested MVR 200 million.

SMI: There are people within parliament who think the tourism ministry is so rich they can fund their own advertising and promotion. It has been said, I can’t quote, but there are some who say that. But obviously it’s not true, people in the ministry are already financing quite a bit of it.

LP: Are there other difficulties faced by the tourism industry in the Maldives?

SMI: It is hard here because there is a lot of work and there is so much co-ordination. Everything has to be brought in, cleared by customs, taken to the resorts and then prepared.

The other difficulty is the management of human resources. A lot of young people in the country do not want to work in the tourism industry so you have this sole problem of finding Maldivians who want to work as opposed to people from overseas who want these jobs.

That doesn’t sit very well with the local population because the media is obviously employed by people who are not very happy with the tourism industry for using expatriates. All the money is going outside the country, when it should be going to Maldives.

Maldivians are not working in this industry because they are not given entitlements and privileges and because they think the industry is not paying all that much, but this is not true. It is just that the kind of work we have in the resorts has not yet become attractive to young Maldivians leaving school.

LP: What sort of work is available to them? Is there any other reason why they are not taking the jobs?

SMI: A resort in the Maldives is like a small town, so you have technical, engineering, maintenance, food production and public relations roles. They all exist on the island.

There is always this thing between the government, the public and the Tourism Ministry, whereby the government and the people seem to assume that the tourism ministry should be training its own people.

It’s difficult because many of us feel the education system in country should be geared towards teaching people to serve the economy and the country, and that should be through jobs available in the Maldives. For example, we checked the Ministry of Tourism once and there were perhaps a thousand jobs going.

What I am saying, is that the jobs are there, but we haven’t been able to tell the young people that there is an alternative in resorts where they can work. But there is something missing, it is not gelling.

Working in tourism is not part of the school curriculum. They teach travel and tourism, but that is not to do with running hotels and hospitality. They are linked, but they are not the same thing. These are some of the problems the industry faces in the country.

LP: How do you think the tourism industry as a whole in the Maldives is progressing?

SMI: I think the industry is going very well here. People who started this 40 years ago are still very involved and these guys have so much experience because they have worked every single day of their lives and know what’s going on and what’s needed.

People like Champa, his company has comes up with brilliant new concepts every time. Then there is Universal, they have a very high standard and a lot of their resorts are home-grown, places like Baros and Kurumba, these are local companies but they are able to compete with world standard brands. There is a lot of thinking going into that. People are not just sitting back and taking the money, they are planning where to go next.

LP: There have been some negative reports in local media regarding resort developments by Maldives Tourism Development Company (MTDC), what is your view on the firm?

SMI: MTDC was a very good project to start with, it was very good thinking because not everyone can be an entrepreneur or even a manager. There are people who just don’t have the skills or inclination to do that. MTDC was a brilliant idea where we can all have shares in the tourism industry.

The former chairman of MTDC ‘Champa’ Hussain Afeef, when he took on something, he would complete it. Herethera Resort for example is the same distance as Sri Lanka is from us in Male’, 470 miles, yet he built that resort in just over a year. That was amazing.

However, when Nasheed came in, he obviously wanted to bring in new management, he knew these people but he misjudged the importance of somebody like Afeef there. When Nasheed removed him, the company made losses and it became worthless. It was such a brilliant thing, shattered. Nasheed has put people in there, the president has put people in there and these people have not been able to come up with any creative ideas.

If they bring in good management they might turn a profit, but right now it is terrible. It has to be resurrected and changed. Someone needs to be brought in who can see things strategically and has empathy for the people. See the company for what it is – a company for the people. But it is worthless at the moment, it needs to be revamped.

LP: What do you think the future holds for the tourism industry in the Maldives?

SMI: There is a trend moving towards people who are wanting to stay and see something different, rather than coming just for relaxation. People want to be involved in the community. It’s not going to be huge, but there are some people who want to do that, it’s a different kind of tourist.

The future of tourism in this country is immense. We have already started building rooms underwater. We already have clubs, dining rooms, and spas and very soon we will have entire bungalows underwater. However, the time it takes to get the Maldives and the cost of getting here is an issue for the future. If they build better planes, and find a way of reducing fuel costs that will be much better for the country, but this is not something we cannot predict.

LP: Why did you decide to leave MATI?

SMI: I needed a break, I had been there for 15 years and I needed to do something different. Being in tourism all these years I realised there is another aspect to tourism that has been totally ignored, and that is culture and environmental tourism. I thought it would be very interesting for me to start digging into this.

LP: Do you think that will be a new tourism market in the Maldives?

SMI: It will be a niche in the market. It might get a bit bigger when we start taking conservation seriously and the restoration of our historical sites – things like the old mosques and cemeteries. There is a lot of history in this country that we have not even tapped yet and that makes me very excited.

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Tourism budget for 2013 increased by MVR 60 million

The tourism budget for 2013 has been increased from MVR 20 million (US$1.2 million) to MVR 80 million (US$5.1 million), local media has reported.

The budget increase follows criticism from the Maldives Association of Tourism Industry (MATI), which last month called for the government to reconsider the MVR 20 million budget allocated for tourism marketing in 2013.

The initial sum of money allocated was the lowest in eight years, according to a statement from MATI, which highlighted concerns that the Maldives’ economy was mostly reliant on tourism.

Tourism Minister Ahmed Adheeb told local media that the ministry had initially requested a budget of MVR 200 million (US$12.9 million) to carry out tourism promotion for the year, however parliament had “erased a zero” from the figure when finalising the budget.

Adheeb noted that while tourism promotion is expensive, the revenue generated from the industry “drives the entire engine”.

“When we put down MVR 200 million, the government authorities don’t actually realise the priority that this requires. Parliament erased a zero from the MVR 200 million we proposed, and gave us MVR 20 million,” he told Sun Online.

“Then we had to work in all other different ways, and now the Finance Minister has committed to give us MVR 60 million more.”

Adheeb claimed that government institutions did not realise the importance of promoting tourism.

In 2012, the ministry set a target of welcoming one million tourists into the country.  It was allocated a MVR 70 million (US$4.5 million) budget to conduct marketing activities to help achieve that goal.

Figures released last month revealed that the tourism ministry failed to reach the one million mark by roughly 42,000 arrivals.

Despite the political turmoil that enveloped the country at the beginning of 2012, the figures showed that there had been a 2.9 percent increase on the total number of arrivals in 2011.

Tourism promotion efforts last year included a US$250,000 (MVR 3.8 million) advertising deal to promote the tourism industry on the BBC and a £93,000 per month (US$150,000) contract with public relations group Ruder Finn in an attempt to improve the country’s image following political unrest in 2012.

Despite the increased expenditure, tourism growth slowed to just 0.7 percent in 2012, compared to 15.8 percent in 2010 and 9.1 percent in 2011.

The government’s forecast for economic growth in 2013 is 4.3 percent.

Adheeb told local media yesterday that the government had “re-set” its sights on reaching the one million arrival target in 2013, and said there were plans to participate in a number of fairs and promotions  to attract more publicity.

“If we can fully establish the Maldives brand, we can promote Maldives and subsequently increase room rates. Every single dollar we spend on marketing will give a large amount of money in return,” he said.

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