Thumburi Guesthouse Island invites bids for hotel development

The Maldives Marketing and Public Relations Corporation (MMPRC) has invited developers to submit bids for beachfront hotel development at Laamu Atoll Thumburi Guesthouse Island.

Plots of 5,000 and 10,000 square feet are available for 25 years. The 5,000 square feet plots are to be given out at US$ 30,000 per year with a US$ 100,000 acquisition fee, while the 10,000 square feet plots are to be given out at US$ 66,000 per year with a US$ 200,000 acquisition fee.

An MMPRC announcement  said bidders must submit documents to the Thumburi project management section at the MMPRC office at Velaanaage in Malé by February 26.

The Thumburi project was launched earlier this year with the aim of making land available on the 17 hectare uninhabited island – as well as the linked Hulhiyandhoo island – for local investors to develop hotels, a diving school, water sports centres, restaurants, and shopping centres.


Government plans to launch new scheme to empower local councils

Fifty percent of rent from atoll shops in Male’ and lease rent on uninhabited islands is to be given to atoll councils, the government has decided.

Speaking at a function marking the decentralisation of administration in the Maldives, President Mohamed Waheed Hassan Manik announced strategies for providing financial support to local councils, local media reported.

As of July this year, the government plans to give 50 percent of rent from atoll shops and uninhabited island lease rent to atoll councils.

The president noted that for the decentralisation system to work there would need to be equal assistance and opportunities for the people. To do this, Waheed said it would take local councils to set aside their political differences.


Government issues ‘last chance’ rent payment notices to resorts owned by political opponents

The Ministry of Tourism on has issued notices to five resorts warning that their lease agreements could potentially be terminated if the rent owed to the state is not paid.

Minister of Tourism Ahmed Adheeb told local newspaper Haveeru that rents paid by resorts constituted a large portion of national income, and said that only a few of the country’s 104 resorts were paying rent inconsistently.

This inconsistency, Adheeb said, was reflected in the national income and that therefore his ministry was giving these resorts one month to pay their dues or face being shut down by the government.

The resorts include Filitheyo Island Resort and Medhufushi Island Resort, both owned by AAA Hotels and Resorts, a family business owned by opposition Maldivian Democratic Party MP Ahmed Hamza.

Zitahli Resorts and Spa Kuda-Funafaru, Kudarah Island resort and Alidhoo Island resort – owned by Yacht Tours Maldives and J Hotels and Resorts – both companies owned by government-aligned Jumhoree Party (JP) MP Abdulla Jabir, were also issued notices.

Jabir – the deputy leader of the JP – this week turned on the government  following his arrest last week while on the inhabited island of Hodaidhoo, along with another fellow MP and senior opposition politicians.

The other arrestees were MDP MP Hamid Abdul Ghafoor – also the party’s international spokesperson – along with former SAARC Secretary General and Special Envoy to the former President, Ibrahim Hussain Zaki, former Press Secretary Mohamed Zuhair and his wife Mariyam Faiz.

Police claimed they found large amounts of “suspected” drugs and alcohol upon searching the island with a court warrant. The arrests were made “based on information received by police intelligence,” police said.

The Tourism Minister meanwhile told Haveeru that the government could “immediately terminate” the lease agreements and take back the resorts if rents and fines for non-payment of rent were not paid, but had instead chose to be lenient on the issue and give the resorts 30 days to pay up.

Adhee added that the government would terminate the lease agreements and reclaim the islands if the rent was not paid during the time period.

“This decision is to those resorts which are currently under operation. Not those that are already being developed. Now we have sent the final notice and the resort owners should decide on paying the rent,” he said.

The Minister claimed the government would terminate the contracts in such a way as to avoid affecting tourists currently staying in the resorts, or the employees working there.

“Politically motivated” – MP Abdulla Jabir

Speaking to Minivan News, Jabir blasted the government claiming the motive behind sudden issuance of the “warning notice” was “purely political” and intending to influence the re-submitted amendment to parliamentary regulations to conduct impeachment votes via secret ballot.

Three days ago a similar amendment initiated by the opposition MDP MP Ahmed Shifaz was defeated in the parliament floor by 34 to 39 votes. However, MDP MP Ibrahim ‘Bondey’ Rasheed has again re-submitted the amendment to Parliament’s Privileges Committee.

“I have only heard about this from the media. I have tried contacting the tourism minister since last night but he had been ignoring my calls. Because of the interview he gave to media, now tour operators are cancelling  bookings and the staff are not satisfied to continue working in the resorts,” Jabir said.

Jabir claimed that he had paid a settlement of US$2 million in rent during former President Mohamed Nasheed’s administration, which was “agreed as a settlement” for the rent of two islands.

However, Jabir claimed that the current government had chosen not to honour the agreement which resulted in continued addition of fines for non-payment of rent, that now stood at about US$4 million.

“I know following the recent political developments and due to my new opposition to the current government, [President] Waheed has now ordered the tourism minister to issue the repayment notice so to threaten his political opponents,” declared Jabir.

“This is highly politically motivated. He knew I was the one behind the submitting of the amendment to parliamentary regulations to make the impeachment vote a secret ballot. It was I who in the first place drafted that amendment and gave it to MP Ahmed Amir. They know this but I will still continue to work for that,” he explained.

“Will do everything to inform international investors what the President is doing” : Jabir

Jabir said he had known for a long time that President Waheed had “the desire to operate a resort” and desperately wanted “to give a resort or two to one of his children”.

“Now I have decided to hand over the resorts, and I am trying to do the formalities in front of the media. But how can I even do that if tourism minister does not have the courage to answer his mobile phone?”

The JP MP questioned why it was that resorts belonging to opposition politicians were being “targeted” while there were many other resorts which had failed to pay rent.

“What I am saying is very clear. If you want to take the resorts, fine take them. But I promise that I will make sure that Waheed’s ‘scorched-earth politics’ and his failed economic policy is informed to all international investors. Who would really want to invest in a country ruled by such a government?” Jabir questioned.

“Even in the US where the economy is failing, the government takes steps to help  businesses. But here it is the other way around. Owners and young businessmen are being beaten and forced to eat sand,” he said, referring to his earlier allegations of torture during the arrest in Hodaidhoo island.

Jabir stated that he was planning to sue the government for the “damages” he incurred following the decision.

“This notice has already costed me in millions,” he claimed.

MDP MP Ahmed Hamza was not available for a comment at time of press.

Statistics from the Maldives Inland Revenue Authority (MIRA) suggest that more than eight resorts are failing to pay rent, and the government is owed US$25 million.

According to Haveeru, Alidhoo Island Resort – operated by Yacht Tours Maldives owes the government a sum of US$4.7 million while Medhufushi Island Resort operated by J Hotels and Resorts owes the government US$ 5.9 million.

Meanwhile Filitheyo Island Resort owes the government a sum of US$ 5.2 million as both land rent and lease while Zithali Resorts and Spa Kuda-Funafaru owes US$395,859.


MIRA formulates policy for enforcement agencies

The Maldives Inland Revenue Authority (MIRA) has formulated and published on its website the official policy (Dhivehi) for taking action against persons or companies with unpaid taxes, fees, rents, royalties or other monies owed to the state.

Under the approved guidelines for the relevant authorities to take measures against non-compliers, the government could refuse to provide services, cease business transactions and refuse to award contracts for the persons or companies with dues to the state.

Exceptions to the first rule however include basic services provided by the government and services provided by one state institution to the other.

The authorities empowered to take the punitive measures and enforce the policy include the Economic Ministry, Finance Ministry, Transport Ministry, Male’ City Council, Maldives Customs Service and the Department of Immigration.

While the policy will be in effect from November 1, 2012, for the first six months the enforcement agencies should refuse to provide services only to companies that owe monies to the particular authority. However, from May 1, 2013, the relevant authorities would be required to check if the company or person owes monies to MIRA.

The exceptions however do not apply to the Maldives Custom Service and Department of Immigration during the first stage of implementation.

Meanwhile, earlier this month, MIRA began enforcing its policy on ‘Freezing Bank Accounts of Taxpayers’ with unpaid taxes, fees, rents, royalties and other monies owed to the state.

“Since publishing the policy, taxpayers were given a grace period of 1 month to settle all outstanding dues. The process for account freezing has been commenced for 37 taxpayers for failure to settle the dues in the given grace period, and the details sent to relevant authorities to freeze the bank accounts of five of these taxpayers, as of 8 October 2012. Some taxpayers who issued dishonoured cheques were also among those who will have their bank accounts frozen. The total owing from these dishonoured cheques amounts to MVR 450,000 (US$29,182),” reads a news item from MIRA.

Moreover, MIRA has filed a number of cases at the Civil Court to enforce judgments over unpaid rent and fines imposed for late or non-payment.


MIRA files first GST-related court case

The Maldives Inland Revenue Authority (MIRA) has filed the first case related to the Goods and Services Tax (GST) with the civil court.

The case was filed on September 13 before being formally registered with the court last Saturday, September 27.

MIRA are claiming US$2,606.86 (MVR40,132) from DeMal Pvt Ltd for Tourism Goods and Services Tax (T-GST) and the fines incurred for non-payment.

T-GST was first introduced in September 2010 before being subsumed by Goods and Services Tax Act one year later.

GST currently imposes a 6 percent tax on non-tax goods and services in the country. T-GST is currently taxed at 6 percent but will be raised to 8 percent on January 1 2013.

The combined GST revenue stream has accounted for nearly 35 percent of MIRA’s income this year – over US$69million (MVR1.7billion).

Director General of MIRA’s revenue service Fathihullah Jameel was unavailable for comment at the time of press.

MIRA’s Commissioner General of Taxation Yazeed Mohamed last week lamented the inability of the authority to collect certain fees owed to the government, accusing the tourism ministry of being a major part of the problem.

Yazeed singled out the issue of tourism land rent as a major source of unclaimed revenue, arguing that MIRA could only pursue the cases through the courts.

“If rent is not paid we have to take it up in court. That is to obtain payments not paid for a certain period. Then it is used as an excuse. From that point on they get a free license to stay without making payments. Once a case is filed in court, it can go up to two years without a single payment,” Yazeed told Haveeru.

MIRA’s website shows that the authority is actively pursuing nearly US$17million (MVR261.8million) in fees and fines, with 85 percent of listed cases relating to land rents.

The biggest cases currently being pursued, in terms of revenue being claimed, involve the operators of Six Senses Laamu and Mehudufushi Island Resort, from whom MIRA is claiming US$3.1million (MVR47.7million) and US$3.2million (MVR49.2million), respectively.

The Medhufushi Island Resort case is also among those which have been registered with the court for the longest time. The case was first registered in July 2011 and has seen five hearings, according to MIRA’s site.

Another longstanding and significant case is that concerning the operators of Filitheyo Island Resort, who are being pursued for around US$2million (MVR30.8million) in a case first registered in June 2011 which is said to have had three hearings.

MIRA’s monthly figures show that tourism land rent for the year so far is only three quarters of that collected by the same point on 2011.

The tourism ministry hit back at this criticism earlier this week, with State Minister Mizna Shareef telling Minivan News that MIRA was also empowered to collect rent.

“It is very unfair and inappropriate for MIRA to make these statements,” said Mizna, who argued that the authority had been pressuring the tourism ministry to suspend operating licenses for late-payers without considering the wider implications for the industry as a whole.

“There has to be balance – the industry must be protected while rents are collected,” she continued.

Tourism is by far the largest industry in the country, contributing over 70 percent of GDP via associated industries and 90 percent of all foreign exchange receipts.


September incomes topple August

Maldives Inland Revenue Authority (MIRA) has released figures showing that the state earned Rf269.6 million more in September than in August, when income was reported at Rf260.7 million.

Altogether, MIRA collected more than Rf500 million (US$32 million) as income through September.

Resort rents accounted for the largest amount of income received (Rf196.4 million). Tourism Goods and Services Tax (T-GST) came in at Rf71.9 million.

Nearly half of the state’s dollar income which goes through MIRA comes from tourism rent payments (US$12.8 million).


Airport developer concedes certain “mistakes” made amidst service improvement aims

The CEO of Male’ International Airport, which is currently operated by Indian infrastructure group GMR, has said that although the company had made certain mistakes in terms of its finance policy of late, management was confident of learning from them to deliver significant changes to the site over the next three months.

Andrew Harrison, who took the CEO position at Male’ international Airport when GMR took control of the site in November, told media today that despite significant work already underway on overhauling behind-the-scenes operations, he was still learning how to deal with stakeholders like airlines and exporters at the site.

The week has threatened to be potentially difficult for GMR, with reports emerging in the press of the company’s alleged plans to increase land lease rent at the airport by 50 percent – the first such price change enacted in a decade. News of the announcement had led some local airlines and a number of import companies raising concerns at the reported increases and the possible impacts on their operations.

Harrison nonetheless claimed that he hoped the public, as well companies working with the airport operator, would soon see more of the changes resulting from its investment in the form of operational and aesthetic improvements at the existing terminal.

“People are expecting to see a lot of change immediately, the change does take a little time, but actually there is a lot of work going on behind the scenes. What we will now see over the next three months is rapid progress where the changes will be more visible to the public,” he said.

“We had, through our concession agreement, been given a mandate to improve levels of service in the existing terminal areas, so this was focused on baggage processing time and baggage delivery time and the checking of passengers. What we are recognising is that people have much greater expectations, so we are spending more money than we are required to in terms of the concession agreement to actually make [the terminal] a much nicer environment.”

The pledge comes as newspaper Haveeru this week reported that airlines such as Island Aviation and seaplane group Trans Maldivian Airlines were concerned at how the implementation of future rent raises could impact on their operations.

Some importers working for the tourist trade have also told Minivan News that they have faced a sudden “100 percent increase” in charges for containers that they need to hire at the airport for their stock.

One importer and supplier of alcohol to a number of tourist properties in the Maldives, who wished to remain anonymous, told Minivan News that a number of the company’s business peers had looked to form a committee over concerns at rate hikes they claim have been deemed “non-negotiable” by GMR.

According to the supplier, the airport operator had acted “unprofessionally” in suddenly announcing that the monthly rates for 70 feet containers at the site were being doubled, meaning certain companies potentially face an additional bill of up to US$45,000 a year to work from the site.

Although the supplier said that they were being given a month to rewrite terms and conditions within new contracts that they were unhappy with, the container rent was seen as a “non-negotiable issue.”

In today addressing the issue of lease rent specifically for local airlines, Harrison denied that any official price had been set, adding that negotiations were now being held with key lease holders like Island Aviation and the company’s sea plane operators over cost amendments that he said remained fully open to negotiation.

Amidst press reports about certain concerns by some lease holders over the potential rise in airport rent and the possible impacts on their operations, Harrison stressed that in future, the company would aim to learn lessons and consult stakeholders “much in advance of any envisaged changes”.

However, the Male’ International Airport CEO claimed the company would still aim to push ahead with adjusted charges in areas such as land lease rent to ensure changes could continue to be funded at the airport.  Harrison claimed that this rate increment would remain one of a “few” financial changes expected to be needed at the airport at present.

Though he did not confirm when the decision to potentially amend rent rates had been decided, Harrison claimed that GMR was working from a long-term development and cost plan set out in its original concession agreement.

“I want the airport to be profitable, but I want it to be responsibly profitable, because with those profits we are able to do many things including the development of the airport ongoing. [By] November 15 2011, most of this work will be done, but actually we will continue, it won’t end. There will continuous improvements all the time,” he added. “These improvements have a cost to them, so we need to have a business model that is responsibly profitable and trying to be responsibly profitable means that when you have different ways of doing things, you must engage your stakeholders in dialogue. We didn’t fix a [rent] price.”

According to Harrison, the potential increase in land rates from US$6 per square metre to US$9 for the same area were primarily expected to impact the operations of Island Aviation and the airport’s two seaplane operators with discussions already underway with them in addressing the issues.

A spokesperson for island Aviation confirmed to Minivan News that the company was currently in a “dialogue” with GMR though no out come had as yet been reached.

In trying to allay fears of further cost rises for stakeholders, Harrison claimed that he hoped to try and address the airport’s partners and customers like suppliers and service operators differently over future notices of change.

“I think one of the lessons that we are also learning is that people would like to have this dialogue much in advance of any envisaged changes. So what we are saying is that, ‘right, we have done a range of changes, let’s stop there now,’” he said. “Anything we want to do let’s have a discussion well in advance to understand the impact of changes we well make.”

Harrison took the example of requirements for new VIP and other lounges at the airport that had been requested by airlines to bring them up to the standards expected from “premium passengers”. The airport CEO said that he expected about US$500,000 to be spent on the project in total to try and meet the demands of airline companies.

“In this business model, what we’re trying to see is how much has to be spent and how which will be recovered in the time available. Don’t forget, this terminal has a life of about two and a half years before we move over to the new terminal and on the basis of that can we stay within the existing costs,” he said. “On the basis of that, can we stay within the existing costs? If we can’t what will be the difference [in charges]? Let’s discuss this with the airlines first before we announce, publish or indicate anything.”

In future, Harrison claimed that the company would try and change its current system of issuing communication about proposed changes before starting dialogue with the companies involved, claiming he would look for “better ways” to do things.

Alongside the issues of rent, Harrison conceded that he was not entirely happy with the manner that the company had reacted to a decision by the Maldivian government last week to amend an longstanding set US dollar exchange rate of Rf12.85 to within 20 percent above or below the figure to attempt to alleviate shortages of the currency.

“We’re human beings and sometimes we don’t always get it right. One example of where we didn’t get it right was that as soon as the announcement came from the Maldivian Monetary Autjority (MMA) about floating the exchange rate, we issued a communication announcing an exchange rate of Rf15.42 [to the US dollar],” he said. “That was incorrect of us to do so quickly. We didn’t need to do it. We could have waited to find out what financial institutions such as the banks were going to do before we did that. I have issued a further communication indicating that we will take the best available rate made by the three banks here in the Maldives.”

An interview Minivan News conducted with airport CEO Andrew Harrison last month about his experiences in the Maldives and plans for the airport can be read here.


Residential Properties Bill accepted by Parliament

The Residential Properties Bill intended to regulate the housing rental industry has been accepted by Parliament.

Independent MP for Kulhudhuffushi-South, Mohamed Nasheed originally presented the bill to the Parliament in November 2009, which aims to protect the rights of both tenants and landlords. It has been in the queue system since.

The bill was widely based upon the Residential Tenancies Act (1987) of New South Wales, Australia, and proposes the creation of a tenancy deposit scheme, with deposits made at the start of a tenancy to be held by the government rather than individual landlords.

There would be a limit on how much the deposit could be and tenants would have the right to appeal if they believe they are not getting a fair rental price.

When he first presented the bill in 2009, Nasheed told Minivan News stricter housing regulations are necessary in a city as overcrowded as Malé, where demand for accommodation dramatically outstrips supply, leaving tenants vulnerable to unscrupulous landlords.

Even then, Nasheed admitted the bill was controversial and said he was unsure it would be passed as it was, but now that it has been accepted by the Majlis, Nasheed said he has “greater hope that a compromise will be reached between those who agree with it and those who don’t.”

“I basically looked at it from a consumer protection point of view,” he said. “So far [housing] has been regulated by ordinary terms of contract.”

Nasheed said he wanted to protect the rights of both the tenant and the landlord, and hopes the bill will help the market by leaving “less room for undue influence.”

The bill was accepted by 45 votes, “seven votes above majority,” Nasheed noted. It will now be sent to a committee before being sent back to Parliament for approval.

“I hope it will all be over in six months,” Nasheed added.

knocking down house
Demolishing a house in Malé

A holistic approach to the housing crisis

Minister for Housing, Transport and Environment, Mohamed Alsam, said the bill “has got rather ridiculous things in it. It’s very foolish to control the market.”

Aslam said the government was trying a more “holistic approach” to the housing crisis in Malé by “diverting demand elsewhere.”

He said the best thing to do was to improve services in other islands and provinces, so people would want to move out of Malé and back to their homes.

“It’s a national development issue,” he said. “Other parts of the country aren’t attractive enough.”

Aslam said that is where the government’s decentralisation plan comes into play. “We have always seen the issue of housing as a broad development issue, not an isolated thing. If we leave Malé as it is, no law will regulate it.”

Although the minister did admit “certain elements of [the bill] are good,” he said “I don’t think I would go with it.”

Housing in Malé

With a growing population of over 100,000, Malé is among the most densely populated cities on the planet, and the housing crisis is only getting worse as more people migrate from other islands and demands grow, allowing rental prices to spike.

Due to the high demand and low supply for housing in Malé, many people who own land choose to rent it out for extra income, either by renting a part of their house or giving the land for the construction of apartment buildings.

A 2008 report by the Human Rights Commission of the Maldives (HRCM) found that 68 percent of families in Malé were living in accommodation that “qualifies as slums by UN definitions.”

Additionally, they found survey participants spent 85 percent of their income on rent and utilities in Malé and Vilingili. They also found some landlords were increasing rent “at will” and forcibly evicting tenants if they were unable to meet their ever-increasing demands.

Effects of overcrowded areas

There are many other issues with overpopulation besides money and rental control; health problems, psychological welfare and even sexual abuse have all been directly connected to living in overcrowded areas.

Dr Jorge Mario Luna, World Health Organization (WHO) representative to the Maldives, wrote: “Several social problems are also faced within the household including child abuse, psychological impact in growing up in areas of overcrowding, breakdown of many families due to the hardship faced by them stimulating a ripple effect of social disorder for the families, particularly the children caught in the situation.”

Buildings in Malé
Buildings in Malé

Dr Luna added: “It is important to note that the major drivers, or social determinants, of health in urban settings are beyond the health sector, including physical infrastructure, access to social and health services, local governance, and the distribution of income and educational opportunities.”


New rent regulation bill proposed in Parliament

A new bill has to regulate rent in Malé been proposed in Parliament by Independent MP Mohamed Nasheed, reports Miadhu.

Nasheed said the bill aims not to control rent, but to set certain standards for the real estate business.

Nasheed noted that in a time when human rights have become key in policy-making, this bill would protect the rights of both owners and tenants. The bill would also form a tribunal to arbitrate rent cases.

Most of the MPs supported the bill, which could help with overcrowding in Malé. But it was proposed that the bill also include rented offices and businesses, so it will not reduce the cost of goods and services.

Dhivehi Rayyithunge Party (DRP) leader Ahmed Thasmeen Ali said the bill could potentially harm the real estate industry.

He said the government should not intervene, because fewer people would enter the market and fewer would construct new homes.

Maldivian Democratic Party (MDP) MP Ahmed Hamza also said introducing the bill at this moment could hinder construction business, adding that the bill would present challenges to the free-market.