Parliament reverses import duty hikes for garments and motorcycles

The parliament today reversed import duty hikes for garments and motorcycles, three weeks after increased rates came into force.

Higher tariffs approved by parliament in December as part of revenue raising measures proposed by the government came into force on April 1.

However, days before the changes took effect, economic development minister Mohamed Saeed told the press that the government was reviewing the new rates as motorcycles had become “a basic need in the Maldives”.

The custom duty for motorcycles had been raised from 100 to 150 percent.

A marketing executive at Sheesha Pvt Ltd, one of the largest automobile whole-sale and retail traders in the country, told Minivan News today that the company has not increased prices as its last shipment arrived before April 1.

Sales picked up dramatically in early February and its stock of motorcycles was completely sold out before April, the executive said.

In late March, hundreds of people queued up to buy cigarettes before import duties on tobacco was hiked from 150 to 200 percent and from 90 laari to MVR1.25 for a single cigarette.

The amendments passed today also require the customs authority to reimburse motorcycle importers who were charged the hiked rates from April 1.

However, Sheesha does not expect a reimbursement as its new shipment has not cleared customs yet.

According to a 2011 report by the Environment Protection Agency, one in six residents of the capital own a motorcycle.

Debate and voting on the government-sponsored legislation meanwhile took place today amid continuing protests by opposition Maldivian Democratic Party (MDP) MPs.

The amendments to the import-export law submitted by Progressive Party of Maldives (PPM) MP Jameel Usman were passed with 46 votes in favour.

The import duty for ready-made garments was raised from zero to 15 percent in April last year. The rate will be brought back to zero once the amendments are ratified.

MP Ahmed Nihan, parliamentary group leader of the PPM, said today that discussions are ongoing with the government to reduce tariffs for other items as well, including heavy-duty vehicles used for construction.

Former minister Mahmoud Razee told Minivan News earlier this month that the government was “flip-flopping” with its policy reversals.

In December, the government also reversed a decision to impose a 10 percent import duty on staple foodstuff such as rice, flour, wheat and sugar.

“There’s no clear-cut, defined, long-term policy,” the economic development minister under the MDP government said.

Revenue raising measures

This year’s record MVR24.3 billion (US$1.5 billion) state budget includes MVR3.4 billion (US$220 million) anticipated from new revenue raising measures.

In addition to revisions of import duty rates, the measures include the introduction of a “green tax” in November, acquisition fees from investments in special economic zones, and leasing 10 islands for resort development.

The government expected MVR533 million (US$34.5 million) in additional income from import duties.

On April 1, the import duty for oil or petroleum products was raised from zero to 10 percent while duties for luxury cosmetics and perfume was increased from zero to 20 percent.

The import duty for cars, vans, and jeeps was hiked to 200 percent.

Import duties were also raised in April 2014 for most items, including textiles, cotton, sugar confectionaries, iron, steel, diesel motor oil, and seat covers of passenger vehicles.


Motor racing event first to offer prize money

The Maldives National Motor Racing President’s Challenge will award event winners with prize money for the first time, although for some racers the trophy and their “pride” are more important.

The National Motor Racing President’s Challenge was launched on June 27 in Male’, a week ahead of the competition to be held on Hulhumale’.

The Maldives Motor Racing Association (MMRA) is receiving support to hold the racing event from the President’s Office and Maldives National Defence Force (MNDF), MMRA Chairman Yoosuf ‘Maaji’ Mazin told Minivan News yesterday.

“This is the first event in the Maldives that the president is giving and it will be continued yearly,” said Mazin. “This is the first time winners will receive prize money, presidential shields, and trophies.”

“MMRA has been doing events on our own, but now we have to do something big because every year there is a football event also, something like a president’s cup, so that means we must also have something like that,” he continued.

International racers from Sri Lanka will be coming for this event, “so we want to make it huge”, added Mazin.

There will be over 100 race car drivers and motorcycle riders competing in the two day event, which will take place on Hulhumale’ July 5-6. Seventeen separate race events are scheduled for the final.

Most of the competitors are “youth and youngsters”, so having sanctioned racing events is important for road safety, according to Mazin.

“This [event] is important because in Male’ the youth have been using the road for illegal racing and there will be a lot of accidents. After we started this there have been very few accidents in Male’,” said Mazin.

“It will be good to control all the guys like that by giving them a safe racing outlet,” he added.

Mazin explained that he approached Defence Minister Mohamed Nazim and “asked him for a budget to help with the event this time”.

“He has given us a committee from MNDF to make this event successful,” said Mazin. “They will be with us during all the events.”

“Nazim actually likes bikes and cars, so because of his interest he’s doing this for us, for the youth,” he added.

Nazim spoke at the National Motor Racing President’s Challenge launch ceremony yesterday evening, which was followed by riders displaying the motorcycles and cars that will be driven in the race and a music show.

Following the July 5 qualifying events on Hulhumale’, a music show and fireworks are scheduled to take place at 8:00pm.

Competition pride

“This is the most popular event for youth – after football – everyone likes to do racing and stunts,” said a local racer nicknamed Xaim.

“It’s every young guy’s fantasy to become a racer because they want to compete internationally.”

He explained that previously races were only about “fun and entertainment”, but have now become more competitive because sponsors are providing financial support.

Each team will make “big investments” spending approximately 100,000 MVR (US$6548.79) total, with upgrades for one motorcycle costing approximately 30,000 MVR (US$1964.64), according to Xaim.

Despite the costly investments, racers are still only interested in winning the trophy, not the prize money, because it’s about “pride”, he added.

Earlier this year, amateur and professional racers took to the streets of Hulhumale’ to compete in the Piston Cup 2013 racing challenge, the Maldives’ first official motorsport competition.


Transport vehicles need renewable energy plan: Blue Peace

“Solar power is not the only source, and it is not enough. We have to pursue other sources as well,” said BluePeace founder Ali Rilwan about the Maldives’ recently proposed mission to cut emissions by 60 percent, using solar energy primarily.

The government’s plan was approved by the Cabinet last month, and a recent proposal from the Renewable Energy Investment Office (REIO) was submitted for crowdsourcing on the internet last week.

Rilwan called the mission admirable but incomplete. “Proposals have been made, but we haven’t seen anything in the Maldives in years,” he said. According to Rilwan, the Maldives is overlooking one of the most significant energy-consuming functions in the country: water transport.

Over 25 percent of the Maldives’ GDP is spent on diesel used for boats.

“Wetlands and vegetation absorb carbon dioxide, and the oceans are being affected by boats’ daily diesel use. But nobody has studied the specifics of carbon sinking, to calculate that 60 percent emissions reduction we need to evaluate how much needs to be done,” he elaborated. “We don’t know, we might be carbon neutral already.”

When diesel was first introduced to boats in the Maldives in the 1970s, law required that sails be kept on boats, said Rilwan. Not only was this method energy efficient, it also had cultural value.

“The sail wasn’t just carbon-neutral, it was a cultural tradition. We also used to have sailing competitions as part of our tradition. But now the sails are no longer required, although you’d think they would be a good idea for a tourist destination like the Maldives.”

Rilwan said the Ministry for Human Resources and Sports last year supported a “not so carbon friendly” motorcycle competition last year, allegedly on Hulhumale.

In January 2010, the Maldives joined 137 countries in signing the Copenhagen Accord declaring their intention to go carbon neutral by 2020. The document is not legally binding but it recognises climate change as a leading issue worldwide.

A government official said the Maldives has since focused on decarbonising the electricity sector, which accounts for over 31 percent of industrial project expenses.

Decarbonising the Maldives over the next 10 years is expected to cost the Maldives US$3-5 million.

Earlier this week, the Maldives signed the Renewable Energy through Feed-In Tariff.

The tariff is expected to reduce electricity costs by promoting a shift from oil fuel to renewable energy sources.

Rilwan praised the government’s “political will and efforts to negotiate” renewable energy in the Maldives. But he said investment in renewable energy was expensive, and that the Maldives lacks expertise.

REIO’s crowdsourcing initiative aims to improve that shortfall.

“While we are working now on the initial production planning and development we will also be looking to use local and international expertise to develop storage capacity,” said Minister for Economic Development Mahmoud Razee.

The initial plan, which is up for debate on an on-line forum, does not account for night time energy and energy storage due to its high cost. A government official said today that limiting use of solar energy to the daytime would still reduce costs significantly. Meanwhile, storage costs are expected to drop to an affordable rate in the next five to ten years.

The official added that plans addressing land transport vehicles’ energy emissions will be announced in the coming months. He noted that not only are electricity-based motorcycles and cars affordable, but Male’s small size negates the concern of going too far from a recharge station.

Although water transport energy reductions have not yet been addressed at the government level, Renewable Energy Maldives (REM) Director Hudah Ahmed said today that the company will soon be testing one of the first hybrid dhonis.

“Solar power is a viable option for the Maldives,” said Ahmed. “But we always say that energy efficiency comes before renewable energy. Consider how to do the best with what you have and what you need before you try to reinvent the system with a whole new resource.”

The REM hybrid dhoni uses a converter, and could reduce diesel consumption by 30 percent. Ahmed said the big idea is to replace current ferries and fishing boats with hybrid dhonis.

Ahmed suggested the Maldives investigate ocean thermal energy conversation (OTEC), a method of generating energy from the temperature differences between deep and shallow waters. “It isn’t commercial yet, but REM says it shouldn’t be ruled out. I think there are some areas in this country where OTEC could be useful,” said Ahmed.