Chinese investment in Maldives tourism ‘expected to rise’

Tourism minister Ahmed Adeeb has said he expects an increase in Chinese investment in Maldives tourism following the lease of a second island for resort development to Chinese companies.

The joint venture -between China’s Guandong Beta Ocean and a Maldivian company – were awarded Vaavu Atoll Kunaavashi this week to develop a five-star luxury resort with some 142 rooms.

“More Chinese investors will follow. There is a lot of interest, from Sri Lankan and Singapore companies as well,” Adeeb told Minivan News today.

The tourism ministry in May also signed an MOU with the state-owned China Machinery Engineering Corporation (CMEC) to develop Thaa Atoll Kalhufahalafushi as a resort.

Chinese tourists accounted for nearly one third of arrivals in 2014 with a total of 363,626 arrivals. China now represents the single biggest source market for tourists in the Maldives with a 30 percent market share.

On Monday, Adeeb said China’s Ambassador to the Maldives, Wang Fukang, had pledged to increase Chinese arrivals to one million. The venture would require extensive infrastructure developments, such as airport developments and building new resorts to increase the total bed capacity of the country, he said.

Mifzal Ahmed, the director of strategy and business development at privately owned airline Mega Maldives, said he hoped “this is the start of a full wave of such investment in the country, and the Government should be congratulated for the role they have played in making these investments happen.”

Mega Maldives pioneered direct flights from Maldives to China in 2009. It operates four to five flights a week from Beijing, Shanghai, and Hong Kong.

“We have long argued that the demands from the Chinese tourists to the Maldives are at times a little different from the European traveller. Therefore, getting investors who understand the mentality of these tourists is a very good thing,” he added.

Mauroof Zaki, the secretary general of the Tourism Employees Association of the Maldives (TEAM), noted the importance of equipping Maldivian staff with the skills to cater to an influx of Chinese tourists.

“We need more language classes on Mandarin or training on food and beverage services to Chinese tourists,” he said.

However, he said he was concerned that Chinese tourists may not be as conscientious as European tourists on labor rights, human rights and the environment.

“When ethical tourists come to the Maldives, it improves the work environment for Maldivian staff, for example, tourists pushed for the equitable distribution of service charge to staff,” he said.

A resort owner, who wished to remain anonymous, said Chinese developers must take care to develop international resorts. “Does the Chinese traveler want to be on an island by themselves? From what I’ve seen, they want to be among others, and do not like to be segregated.”

The Maldives Association of Tourism Industries (MATI) was not available for comment at the time of going to press.

The Maldives reached the one million tourist arrival mark in 2013. In 2014, the Maldives welcomed 1.2million arrivals, and the government hopes to see 1.4million arrivals in 2014.

The tourism ministry last week launched the “Visit Maldives Year 2016” campaign. The US$10million will see festivals and trade events, and award free holidays throughout the year. The Maldives has also been designated as the partner host country for the ITB fair in Berlin in 2016.

According to Forbes, Chinese investment in the global hospitality industry has seen a surge in the last two years. The trend started when Chinese Dalian Wanda group announced plans of investing a US$ 1.09 billion luxury hotel in London.

Since then, Chinese companies has announced a US$ 900 million skyscraper in Chicago, a US$ 1.95 billion acquisition of New York’s Waldorf Astoria, and a US$ 399 million hotel in Sydney.

Maldives has become a main attraction for Chinese travelers, with South China Morning Post saying, the country has topped travel lists for Chinese travelers, with the country being promoted in China’s media as an “approved destination” by the Communist Party government.


Tourism ministry seizes environment regulatory powers

The parliament has granted powers to the tourism ministry to authorise developments on resorts in a move critics say will weaken the environment protection regime, and pave the way for corruption.

Amendments to the tourism law passed today transfers to the tourism ministry the Environment Protection Agency’s (EPA) powers to evaluate environmental impact assessments (EIAs) and authorise projects such as land reclamation. The agency functions as an independent body under the environment ministry.

Voting on the bill submitted by government-aligned MP Mohamed Ismail took place amid continuing protests by opposition Maldivian Democratic Party (MDP) MPs.

It was passed with 41 votes in favour after Speaker Abdulla Maseeh Mohamed asked for a show of hands.

If the amendments are ratified, resorts will have to seek authorisation from the tourism ministry for any development that could “permanently alter” the island, plot of land, or lagoon’s environment. The ministry must evaluate an EIA report before issuing permission.

EPA permanent secretary Ajwad Musthafa told the economic affairs committee during its review of the legislation last week that “the independent checks and balances system will be lost” if the regulatory powers are transferred to the tourism ministry.

The move amounts to allowing the tourism ministry to “self-regulate,” he contended.

The EIA process is the “main instrument” of the environment protection regime and adheres to international best practices, he said, noting that the reports are prepared by independent and qualified consultants.

Ajwad also objected to transferring technical experts to the tourism ministry as the agency’s “institutional capacity” was built up over a long period.

EPA director Miruza Mohamed meanwhile warned that the move could reduce funding from international donors.

However, the ruling party says “making the services available under one roof would ease the burden on investors, speed up services, and improve investor confidence.”

The involvement of other ministries and institutions in regulating resorts hinders the tourism ministry and “lowers investor confidence”.

The new provisions state that “only the tourism ministry will have the authority” to conduct assessments and authorise development projects.

The tourism ministry will also have the power to impose fines not exceeding US$5 million for violations.

Transparency and accountability

Environmental NGO Ecocare warned that the move conflicts with the environment protection law – which requires the EPA to evaluate assessments – and could “pave the way for corruption”.

“Under this particular scenario we also feel that when EPA assess and evaluates EIA reports, it is a more transparent practice than leaving this to the Tourism Ministry, who carry out the evaluation and awarding of bids for tourist resorts,” Ecocare said in a press release today.

The current system put in place by the Environment Protection and Preservation Act includes checks and balances and assures transparency and accountability, Maeed Mohamed Zahir from Ecocare told Minivan News today.

With the changes to the law, an unscrupulous official at the tourism ministry can grant approval “regardless of the effect on the environment,” he said.

Opposition Maldivian Democratic Party (MDP) MP Fayyaz Ismail said at the committee last week that the tourism ministry presently “discriminates” in issuing and suspending operating licenses to resorts.

Fayyaz warned that officials could misuse the authority to approve development projects on resorts and selectively impose fines at whim.

MP Ali Fazad, a ruling Progressive Party of Maldives MP, also expressed concern with the amendments conflicting with the existing environment law as “two laws would have two [provisions] for the same thing”.

However, all ruling coalition MPs on the committee voted in favour of the bill and forwarded it to the parliament floor.

The law also introduces a new scheme to allow the extension of resort leases to 99 years for a lump sum payment of US$5 million.

The changes aim to incentivise investors, make it easier to obtain financing from international institutions, and increase revenue for the government.

To be eligible for a lease extension, a resort property must be operational with an existing lease period of 50 years and must not owe money to the government.

Under the current Tourism Act, the maximum lease period for resorts or hotels is 50 years. However, the constitution allows leases up to 99 years.


President Yameen announces development of five resorts in Haa Dhaalu Atoll

President Abdulla Yameen has announced plans to develop five resorts in the northern Haa Dhaalu Atoll next year.

Yameen said that the first islands to be developed as resorts by the current government will be located in Dhipparufushi, Vaikarumuraadhoo, Kanamana, Kudafaru, and Keylakunu islands in the country’s second-northernmost atoll.

During his visit to the northen atolls, President Yameen also talked about the government’s plans to develop an airport on Kulhudhuhfushi to further encourage the arrival of tourists.

Officials from the government promised the even distribution of resorts earlier this year following an online petition calling for the area to participate in the benefits of the country’s billion dollar tourism industry. Haa Dhaalu is currently the only atoll in the country without any operating resorts.

President’s Office Spokesperson Ibrahim Muaz told Minivan News of the strategic importance of Kulhudhuhfushi Island, which has a population of around ten thousand people.

“Projects like the proposed airport, resort development, and the I-Havan mega project will bring with it prosperous employment opportunities for the people residing the northern atolls, eliminating need of migrating to the capital Malé for employment,” said Muaz.

Muaz also noted that such projects, while providing numerous employment opportunities, would also develop the infrastructure in the region and improve the general living conditions in the North.

The UNDP’s most recent Human Development Report noted that disparities between the central and outer atolls were causing losses to human development, with the northern atolls reporting to suffer the most from limited job opportunities and social services.

Regional development

This year’s Avaaz petition – signed by just over 500 people – noted that the economic and societal problems of the 20,000 inhabitants of the atoll could be alleviated by the development of resorts.

The petition argued that the development of the region’s “pristine uninhabited islands” would halt the “mass migration” to Malé which was “tearing up the social fabric of our society”.

President Yameen’s election campaign pledged to develop 50 operational resorts during the five year presidential term. Yesterday’s proposed 2015 budget also planned for tourism growth, with 10 new resorts proposed in a MVR24.3 billion budget plan.

Despite the total number of resorts in the country exceeding one hundred, the majority are clustered around Malé and the country’s main international airport.

After initial plans for the 40-year-old industry’s development envisioned regional hubs, the introduction of sea planes has encouraged the concentration of resorts in the now-crowded central atolls.

The government’s plans for regional development have centered around the controversial SEZ bill, which it argues will decentralise development in order to promote regional growth – though the bill’s detractors fear that the policy will come at the expense of political decentralisation.

Relaxed regulations in the SEZs are intended to attract investors for a number of ‘mega projects’, including the iHavan – or ‘Ihavandhippolhu Integrated Development Project’ – in Haa Alif Atoll.

The project aims to take advantage of the strategic location of the Maldives’ northernmost atoll on a major shipping route – through which more than 700,000 ships carry goods worth US$18 trillion a year – and develop 5,700 hectares of land along with deep natural harbours.

Meanwhile, environmental NGO Ecocare has protested against the proposed Kulhudhuhfushi airport, pointing out that the airport’s development would destroy a mangrove area which would be reclaimed in order to build the airport.

Ecocare suggested a speedy ferry transportation system to Hanimaadhoo Airport which is just 16.6 km away after labelling the Kulhudhuhfushi airport as “economically less viable”.


Parties reach agreement for committee to resume review of SEZ bill

Political parties in parliament have reached an agreement for the economic affairs committee to resume its review of the governments flagship special economic zone (SEZ) legislation after the Jumhooree Party (JP) and Maldivian Democratic Party (MDP) boycotted proceedings last week.

At a meeting held last night to resolve the impasse, JP Leader Gasim Ibrahim reportedly assured cooperation for continuing the review process, explaining that he had walked out in protest of the committee chair refusing to incorporate recommendations from state institutions.

The business tycoon said he boycotted Wednesday’s (August 13) meeting after his suggestions to address “one or two issues” in the bill were ignored.

Representing the main opposition party, MDP MP Mohamed Aslam insisted that the party’s concerns should also be addressed.

If not, Aslam said, the party would “take to the streets” in protest. On Thursday (August 14), the MDP announced protests against passing the bill in its current form, warning of “dangerous” consequences.

After walking out of Wednesday’s meeting, Gasim had also warned last week that an SEZ law would facilitate massive corruption, threaten independence, and authorise a board formed by the president “to sell off the entire country in the name of economic zones.”

Further meetings of the committee – where the ruling Progressive Party of Maldives (PPM) and ally Maldives Development Alliance (MDA) have a voting majority – had been cancelled following the boycott.

At last night’s meeting, PPM MP Ahmed Ameeth proposed holding a meeting today to approve a timetable to conduct the review process. While MDP MPs voted against it, the proposal was passed with the JP MPs’ support.

Subsequently, at the meeting this morning, the committee passed a motion proposed by Ameeth to give authority to the committee’s chair – PPM MP Abdulla Khaleel – to hold meetings every day of the week except Friday to fast-track review of bills.

The motion was passed with five votes in favour. While JP MPs Gasim Ibrahim and Abdulla Riyaz voted against the motion, MDP MPs on the committee did not attend today’s meeting.

Khaleel has previously declared his intention to complete the review process and send the bill to the Majlis floor for a vote before the end of August. Parliament breaks for a one-month recess at the end of the month.

Parliamentary oversight

The MDP has meanwhile been holding nightly rallies at its haruge (meeting hall) in Malé to protest “openly selling off the country” through SEZs.

Speaking at a rally Thursday night, MP Eva Abdulla objected to the absence of parliamentary oversight in the draft legislation, noting that a 17-member investment board appointed by the president would have the authority to create SEZs.

While the president’s nominees to independent institutions required parliamentary approval, Eva noted that parliament would not have a similar confirmation role for endorsing members to the board.

As investors would not have to pay import duties or taxes for a 10-year period, Eva contended that the public would not benefit from the SEZs.

Investors would also be able to bring in foreign workers under relaxed regulations while companies with foreign shareholders would be able to purchase land without paying privatisation fees or sales tax.

In other countries, Eva said, such incentives were offered to investors in exchange for creating job opportunities for locals.

At a rally in Addu City on Friday night (August 15), MDP MP Rozaina Adam urged the public to consider why President Abdulla Yameen did not wish for parliament to exercise any oversight despite the PPM’s comfortable majority in the People’s Majlis.

The MP For Addu Meedhoo suggested that the president did not want his own party’s MPs to be aware of the “illegal activities” and “massive corruption” that would take place in the SEZs.

Responding to the criticism from the opposition, President Yameen told reporters prior to departing for China Thursday night that leasing islands or plots of land was the prerogative of the president or the executive.

“Parliament could make rules. That’s why we’re making a law. But after the rules are set, it is not the parliament that would designate the economic zones. Parliament is not concerned with governance,” he argued.

Parliament could amend the draft legislation to address shortcomings, Yameen added, suggesting that the president having authority to create SEZs was no cause for concern.

On the tax incentives, Yameen contended that resorts were also developed with similar tax exemptions.

“Even now, everything brought in for a new resort under development is exempt from [import] duties,” he said.

“So they have enjoyed the benefit of special economic zones without a law through the tourism law. What we’re trying to do now is to give that benefit through the special economic zone.”


Government assures even resort distribution following Haa Dhaalu petition

The Tourism Ministry has assured that the development of resorts will take place throughout the atolls following an online petition calling for tourism growth in Haa Dhaalu.

Placed on the Avaaz website last week, the petition calls upon the government of President Abdulla Yameen to alleviate the atoll’s economic and social problems by bringing resorts to the area.

“It has been over 40 years since the tourism industry flourished in Maldives. However, the atoll with approximately 20,000 people has not yet got the opportunity to enjoy the economic benefits of this sector,” read the petition.

Noting that Haa Dhaalu is the only atoll not to have any operational resorts, the petition argues that development of the region’s “pristine uninhabited islands” would halt the “mass migration” to the capital Malé, which was “tearing up the social fabric of our society”.

“We have waited long enough to enjoy the success and development that tourism industry has brought to other regions of the Maldives,” the petition argues.

“Hence, on behalf of all the people from Haa Dhaal Atoll, we humbly ask the government not to exclude us from this prosperous and growing industry.We urge the government to give the utmost importance to solve the issue of income disparity caused by uneven development of tourism industry in Maldivian atolls.”

The Maldivian economy is heavily dependent on tourism, accounting for an estimated 80 percent of GDP, generating 38 percent of government revenue in 2012. Tourists arrivals grew by 17 percent between 2012 and 2013.

In response to the petition, State Minister for Tourism Ahmed Musthafa Mohamed told Minivan News today that the government’s promises to develop ten resorts a year would include Haa Dhaalu.

“I can’t comment on previous governments but this government in their manifesto had mentioned that they are planning to develop ten new resorts each year – I’m sure sure that developments will be throughout the Maldives.”

Musthafa noted that a lot of issues affected the location of developments, with the issue of transportation in Haa Dhaalu – part of the country’s northernmost natural atoll, Thiladhunmathi – having been a longstanding one.

Thought the Maldives is now home to over one hundred island resorts spread across 26 natural atolls, the majority of resorts are clustered around the country’s capital Malé and the country’s main international airport.

Despite the opening of Hanimaadhoo International Airport in Haa Dhaalu atoll two years ago, the continued lack of economic activity has led to significant local support for a second regional airport in nearby Kulhudhuffushi.

While the new development threatens to destroy much of the island’s mangrove habitat, recently re-elected island MP Abdul Ghafoor Moosa has previously argued that his constituents’ economic concerns outweighed the environmental.

“Over fifty percent in the north are below the poverty level,” Ghafoor told Minivan News in January. “Still they need economic activity. If they don’t get it, it’s very difficult to survive.”

Haa Dhaalu “unnoticed or perhaps unheard”

The Avaaz petition – which has received over 460 signatures – argues that, despite its relatively high population of 20,000 people, the atoll had gone “unnoticed or perhaps unheard” by consecutive governments.

“The state of our local economy is a great concern for the people of Haa Dhaal Atoll. More importantly, the absence of tourism industry within this atoll has become a major barrier for economic and social development.”

The petition goes on to suggest that the limited local opportunities in the civil service, fisheries, and agriculture had failed to provide enough employment opportunities.

“We do understand that three of our islands have been given for resort development but it has been over 12 years without any of them being opened for tourists. This has cost 2,000 jobs that was promised for us with these resorts.”

The 2013 Tourism Yearbook produced by the Tourism Ministry shows that three resorts are currently under development in the atoll, although only one had been given an estimated opening date – for December this year.

Reasons for the failure to develop secondary tourism hubs in the north and south of the were addressed in the ministry’s ‘Fourth Tourism Master Plan – 2013-2017’.

The document explained that historical growth patterns in the tourism industry had centred on the Malé area after private investors sought greater economies of scale. The introduction of sea planes – expanding the area serviceable from Ibrahim Nasir International Airport – had further delayed regional expansion.

“If, as the last two masterplans strongly suggested, the suitable islands around the Malé’s hub are now more or less fully developed, the time has come to give priority to the secondary hubs,” read the document.

Source: Fourth Tourism Master Plan - 2013-2017

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.


DRP MP Mausoom appointed GM of Sun Island

Dhivehi Rayithunge Party (DRP) MP Dr Abdulla Mausoom has been appointed General Manager of Sun Island Resort and Spa, a resort owned by Jumhoree Party Leader Gasim Ibrahim.

Gasim’s party allied with the Progressive Party of the Maldives (PPM) which won the recent election.

“Tourism has always been very close at heart. I’ve taken over as the resort’s General Manager yesterday,” Dr Mausoom said, according to Sun Online.

The resort’s previous manager, Mohamed Saeed, was last week appointed Minister of Economic Development.

Correction: An earlier version of this article incorrectly stated that Sun Island is owned by Ahmed ‘Sun’ Shiyam. Minivan News regrets the error.


Tourism decline due to negligence in promoting destination: ‘Sun’ Shiyam

The decline in tourism arrivals from the Maldives’ traditional European markets is a result of the state’s failure to adequately promote the destination, resort tycoon and Maldives Development Alliance (MDA) leader MP Ahmed ‘Sun’ Shiyam has declared.

The MDA allied with the Progressive Party of the Maldives (PPM) for the recent election, in which PPM candidate Abdulla Yameen was declared President.

“Tourist arrivals from European markets have gone down more than ever before. Maldivians are not able to enjoy the real benefits, because of negligence in promoting tourism,” Shiyam alleged in local media.

Tourism marketing is overseen by the Maldives Marketing and PR Corporation (MMPRC) and Tourism Ministry, the minister of which, Ahmed Adheeb, was last week reappointed to the same post in Yameen’s government. The MMPRC’s former head, Mohamed Maleeh Jamal, was appointed Minister of Youth and Sports.

Shiyam warned of a deteriorating economic situation that could leave the government no other option than cost cutting.

According to a recent report by the Finance Ministry, tourism growth flat-lined in 2012 as a result of two years of political turmoil.

The tourism industry’s Gross Domestic Product (GDP) growth in 2012 declined by 0.1 percent following 15.8 percent growth in 2010 and 9.2 percent in 2011, the Finance Ministry revealed in a “Fiscal and Economic Outlook: 2012 to 2016″ statement included in the 2014 budget (Dhivehi) submitted to parliament.

“The main reason for this was the political turmoil the country faced in February 2012 and the decline in the number of days tourists spent in the country,” the report explained.

Tourism growth is measured in bed nights, as arrival figures – predicted to top one million in 2013 – do not necessarily give a clear picture of the industry’s performance.

“As the most number of tourists to the country now come from China, we note that the low number of nights on average that a Chinese tourist spends in the Maldives has an adverse effect on the tourism sector’s GDP,” noted the Finance Ministry’s report.

The Maldivian economy is largely dependent on tourism, which accounted for 28 percent of GDP on average in the past five years, and generated 38 percent of government revenue in 2012. Indirectly the industry is thought to contribute up to 70 percent of GDP, and 90 percent of all foreign exchange.

Much of that revenue is generated through the tourism GST, introduced during the Nasheed government amid resistance from many of the country’s resort tycoons. It is currently set at 8 percent, however the new government has warned it may increase it to 12 percent in an attempt to match its high levels of expenditure.


Chinese tourists take big spending to Maldives: The Wall Street Journal

“Rich Chinese who are sick of crowds at home during major holidays have discovered the Maldives, the tropical islands that typically draw jet-setters from Europe looking for an exotic locale,” writes Wei Gu for ‘The Wall Street Journal’.

“The Maldives has become the most desired destination for the Chinese, according to a report from China’s Tourism Bureau. Chinese tourists now dominate travel to the island country, with 103,734 arrivals in the first seven months of 2013, up 66 percent from the same period in 2011, according to its Ministry of Tourism Arts and Culture.

Chinese visitor numbers dwarf those from the UK and Italy, which are in second and third place with 60,021 and 53,493 tourists, respectively.

During the recent Golden Week holiday, Zhu Hong, a partner in fashion boutique Shanghai Tang, joined with a group of eight business acquaintances for a private-jet trip to the Indian Ocean islands. The luxury-goods executive is now on his seventh passport after running out of pages on the previous six. Most of his friends, who are Shanghai property developers, haven’t spent as much time abroad, so they were eager to tag along with a well-travelled English speaker.

Unlike many Chinese who often travel with business associates, Mr Zhu normally prefers to spend holidays with his family, but made an exception because his son was training for a tennis tournament.

They stayed in villas on the water in the Maldives, but hardly dipped their toes in the water. They spent most of their time playing a popular Chinese card game called fighting the landlord.

‘Although I wished they have spent a bit more time on the beach, they really saw this game as an engaging intellectual challenge,’ Mr. Zhu said.

Well-off Chinese who are tired of beaches in Southeast Asia are looking for a new destination.

For Chinese passport holders, the Maldives is one of the few countries in the world that doesn’t require the hassle of a visa. Its white sand and lush green water couldn’t be more different than the travel scene in China during Golden Week, one of two weeks during the year when nearly the whole country is on holiday.”

Read more.