New financial restrictions on tourism development exclude small and medium-scale investors: developer

An island owner involved in the country’s burgeoning mid-market holiday sector has slammed new regulations imposing financial restrictions on tourism joint venture projects with the government, claiming the legislation outright excludes small and medium-scale investors.

Speaking on condition of anonymity, the island owner alleged that the recently implemented amendments to the Tourism Act served to “shut the door” on small and medium-sized investors.

The Ministry of Tourism, Arts and Culture told Minivan News that the regulations were required in order to ensure future developments in the country were financially viable and that investors could guarantee a project’s completion.

However, the regulation is expected to favour much larger-scale investment projects such as resorts, to the detriment of mid-market tourism, claimed the island owner.

“The real issue here would be that only those with very high net worth can be venture partners with government. Very, very few tycoons are in that wealth bracket,” the source said.

“[Former President] Nasheed’s government tried to be inclusive in offering business opportunities. This regulation is exclusive and shuts the door for medium to small-size investors to partner with the government.”

Joint venture regulation

Published in the Government Gazette Volume 42, number 17 – dated January 28, 2013 – the regulation requires any joint venture partner working with the state on a tourism projects to have a minimum financial worth of US$300 million  and make a minimum initial capital investment of at least US$100 million.

The regulation, entitled the “Procedure to Follow Where the Government Undertakes Joint Venture Investment in Islands or Land”, allows a company with at least a 10 percent share held by the state to develop a resort from land set aside for tourism use, such as a picnic island.

Land used for water sports or diving would also be included once the lease for the area is acquired by a joint venture company.

“Notwithstanding that section five of the Maldives Tourism Act states that islands and land for development as tourist resorts shall be leased to the party that submits the best-qualified bid in respect of such islands or land in accordance with pre-established procedures in a public tender held by the Ministry of Tourism; the same section states that those Islands or land in which the Government makes an investment wholly or in joint venture shall be exempted from the Procedure provided therein,” the regulation reads.

“Therefore the object of this procedure is to determine the procedure to follow in that prescribed exemption status. Uninhabited islands or land may be leased to a company created under a joint venture with the Government for tourist resorts, tourist hotels and marinas development pursuant to this Procedure.”

An unofficial English translation of the regulation can be read here.

Development safeguards

Minister of Tourism, Arts and Culture Ahmed Adheeb told Minivan News this week that the regulation was needed to safeguard future resort development, claiming opportunities would continue to exist for small and medium investors in the tourism sector through sectors such as guest-houses and safari boats.

With what he called a “limited” number of islands presently available in the country to be developed as resort properties – a major earner for the Maldives government both in terms of lease payments and Tourism Goods and Services Tax (T-GST) – Adheeb said the regulation was already bringing in large-scale investment.

“We already have a Qatar-based group interested in the resort business here and they have signed a memorandum of understanding (MOU) on this,” he said. “We are now looking to find a suitable location for them.”

Adheeb claimed the legislation was particularly important considering the  number of pending tourism development projects approved under the former government that failed to be completed – resulting in an overall loss to the country’s economy as a result. He said that the regulation approved back in January would ensure a more “strategic” solution to finding investment partners to ensure financial returns on tourism projects.

Adheeb said that the regulations applied to land such picnic islands that were effectively being used “almost as a resort”, such as areas licensed to serve alcohol to tourists, something not allowed on islands designated as “inhabited”.

“The only difference [to these islands] is that tourists cannot sleep there for the night,” he said. “Now they can stay there the night, but [operators] have to pay land rent. It is to stop the concept from being abused.”

The tourism minister said that picnic islands open to the Maldivian public would not be affected by the regulation and would continue to be accessed and used by local people.

“Picnic island”

Speaking to Minivan News, former Tourism Minister Dr Mariyam Zulfa said the concept of a “picnic island” dated back to the 30-year rule of former President Maumoon Abdul Gayoom.

She said the Gayoom administration had opted to lease islands either for tourism – such as through the development of exclusive resort properties – or tourism-related purposes.

While islands leased for tourism went through a bidding process, land provided for tourism related purposes was said to have been provided on an “ad hoc” basis at the tourism ministry’s discretion, according to Dr Zulfa.

“These were often leased for the purposes of day picnics for tourists, safe harbours and other ancillary facilities of resorts,” she stated. “These islands were only for the use of those persons allowed by the leaseholder (and not available for public use). These islands came to be known as ‘picnic islands’, leased by the Ministry of Tourism.”

Dr Zulfa claimed that the method of providing land for tourism related purposes during the Gayoom-era meant that there had been a lack of regulation for how much an individual party paid to lease such islands.

“Originally these were leased at rates that were not based on a uniform formula and it was very difficult to justify as to why one party had an island for, say US$2,000  a month and others for double that or sometimes more,” she added.

“What has happened traditionally is that some of the leaseholders started building rooms on some of these islands for tourists and very soon some islands became, for all intents and purposes, a tourist resort but without being registered as one and of course without being registered for the taxes that were attached to tourist resorts.”

Under the Nasheed government, Zulfa claimed the former administration attempted to introduce “a fair and just” formula allowing “picnic islands” to be converted legally into tourist resorts at the leaseholder’s request in partnership with the government.

“Thus the uniform formula of US $600,000 per square hectare and all the other conditions were stipulated in our regulations and picnic island lease holders were invited to become legal – if they so required, and without involving the bidding process. These islands are very different to islands leased by other ministries as tourism legislation – and tourism tax, I might add – applies only to islands leased by the Tourism Ministry.”

She added that land leased for public purposes such as picnics by other ministries would not be affected by the Tourism Act.


Construction chief calls on government to impose occupational safety act

The relatively small number of building site deaths recorded in the Maldives in recent years is more the result of “good fortune” rather than industry commitments to safety, the head of one of the country’s most prominent construction industry bodies has warned this week.

Mohamed Ali Janah, President of the Maldives Association of Construction Industry (MACI), told Minivan News that he believed a lack of national regulations outlining health and safety obligations at the nation’s building sites was a major point of concern needing to be addressed. He added that despite there being “not many deaths” attributed to the Maldives construction industry, laws still needed to be passed to ensure the safety of staff.

According to Janah, when assessing the standards of occupational health and safety on the country’s construction sites there were very few places in the world that “would accept the way work is conducted here in the Maldives”.

The comments were made after the Maldives Police Service police confirmed Tuesday (June 19) that a Bangladesh national working in the capital had died from injuries sustained during a fall from the sixth floor of a building site.

Police Spokesperson Sub-Inspector Hassan Haneef said that the construction company operating the site has said that “all safety measures” has been enforced at the time of the incident. However, after police interviewed the deceased’s co-workers, Haneef said it had been alleged that no such safety measures were adopted at the site.

When questioned by Minivan News about what actions the police may look to take in relation to the incident, the police spokesperson said he could not comment further on the case while investigations were ongoing.


While the Centre for Community Health and Diseases Control (CCHDC) is presently said to be working on drafting regulations that would impose safety standards on the industry, authorities have told Minivan News that there is presently no legal framework compelling construction workers to adopt occupational health measures.

According to MACI head Janah, this lack of regulation – as well as strong pressure for cost-cutting within the construction industry – were proving to be major setbacks in ensuring industry-wide improvements in health and safety.

“The issue of occupational health and safety has been a problem for years now. There are presently no laws encouraging construction companies to adopt safety standards in the workplace,” he said. “Clients are also not setting aside money to ensure health and safety measures are being met. People just don’t understand the importance of it in the workplace.”

Janah claimed that there were already a number of construction companies within the country acting in a responsible manner when it comes to ensuring employee safety. Yet despite the efforts of such companies to hold daily safety drills and other on-site programmes, he added that the industry’s work was being tarnished by other construction groups that were failing to meet their obligations.

“The majority of small and medium sized [construction] companies are not being paid or compensated to ensure employee safety, which makes it very difficult for them to adapt,” he added.

Janah said that MACI set out official guidelines late last year to try and ensure the organisation’s members were prioritising employee safety.  However, he conceded that these guidelines were not a substitute for regulation, calling on the government to press ahead with passing legislation on mandatory safety obligations for construction workers.

Janah said he was “very sad” at the death of the construction worker who fell to his death this week in Male’ and pointed out that it was “not the first time” a construction employee had been injured or killed working on a building site in the capital.

“The employee was not believed to be wearing any safety gear when he died. This is shocking. Fortunately there have not been many deaths in construction here,” he said. “We will only see health and safety measures being adopted though when companies are willing to pay for it. However, if there is regulation, then there are also safety standards that companies will be forced to adhere to.”

When contacted today about the potential nature of safety regulations for the construction industry, the Ministry of Human Resources Youth and Sport forwarded Minivan News to the country’s Labour Relations Authority (LRA).

The LRA’s Assistant Director, Aishath Nafa Ahmed said it had already been looking to establish a regulation that would outline occupational health requirements at construction sites in future. According to Ahmed, the LRA was presently powerless to take action against an employer found to be operating unsafe sites under existing regulation.

“We can at present go to a site and inform employers about safety, but we do not have powers to act on possible concerns,” she said. “Last year, we ourselves started on a draft regulation as well within the ministry. But I do not know whether this got completed or not.”

Ahmed added that from her understanding, the country’s CCHDC had also been working to outline an act on worker safety that was designed to try and cut down on incidents such as the construction site death seen this week.

“They did send us an outline in April about [worker safety],” she said.

High commission concerns

Among those to have expressed concern this week at the work-site death of a foreign national and wider issues of occupational safety on the country’s construction sites, the High Commission of Bangladesh in Male’ said it had “raised concerns on a regular basis” over the safety of occupational health in the country for its nationals.

High Commissioner Rear Admiral Abu Saeed Mohamed Abdul Awal said that he had been in touch with representatives in the country over trying to “ensure” that sufficient safety measures were being afforded to workers in the country.

“We have been interacting with officials at various levels here about this issue. It is an ongoing process,” he added.

“Bad employers”

Last month, Commissioner Awal said he believed workers from Bangladesh were regularly being brought to the Maldives to perform unskilled work, usually in the construction industry, alleging that upon arriving, expatriates from Bangladesh were suffering from the practices of ”bad employers”.

“This is a real problem that is happening here, there have been many raids over the last year on unskilled [expatriate] workers who are suffering because of the companies employing them. They are not being given proper salaries and are paying the price for some of these employers,” he said.

Rear Admiral Awar added that it was the responsibility of employers to ensure expatriate staff had the proper documentation, suitable living standards and safe working environments.

Concerns about the treatment of expatriates from across the South Asia region were also shared by Indian High Commissioner Dynaneshwar Mulay. Speaking to Minivan News in April, Mulay raised concerns over the general treatment of Indian expatriates in the Maldives, particularly by the country’s police and judiciary.

Mulay claimed that alongside concerns about the treatment of some Indian expatriates in relation to the law, there were significant issues relating to “basic human rights” that needed to be addressed concerning expatriates from countries including Sri Lanka and Bangladesh.

Big business

Beyond concerns about the basic human rights of foreign employees in the country, labour trafficking is also believed to represent a significant national economic issue.

An ongoing police investigation into labour trafficking in the Maldives last year uncovered an industry worth an estimated US$123 million, eclipsing fishing (US$46 million in 2007) as the second greatest contributor of foreign currency to the Maldivian economy after tourism.

The authorities’ findings echo concerns first raised by former Bangladeshi High Commissioner Dr Selina Muhsin, reported by Minivan News in August 2010. The comments by Mushin were made shortly after the country was placed on the US State Department’s Tier 2 watchlist for human trafficking.