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 terminates Tatva waste management deal

The government has decided to terminate the agreement made with India–based Tatva Global Renewable Energy to provide waste management services in the capital Malé and nearby areas.

A company source said that the cabinet’s Economic Council informed them last month, citing unfavorable relations with the city council and the government’s preference for a state-owned service.

Speaking to Haveeru today, Economic Council Co-Chair and Tourism Minister Ahmed Adeeb confirmed the move to terminate the contract.

“The current government is looking to completely solve the waste management problem in the next two years. The previous government talked a lot about environmental issues but there was no actual work done to solve the issues,” said Adeeb.

The termination marks the latest in a number of terminated or renegotiated contracts signed under the government of Mohamed Nasheed, while current President Abdulla Yameen continues moves to improve the country’s investment climate.

City Mayor Mohamed Shihab informed Minivan News that Malé City Council had not been consulted over the decision despite being one of the parties involved in the project.

“The city council will continue on its waste management operations like it has been so far. The work so far has been done by MCC and not Tatva and this will not lead to any differences in the short run, however we would need to start looking into long term alternatives again,” said Shihab.

The council – dominated by the opposition Maldivian Democratic Party (MDP) – has this year introduced trash cans and fines for littering. Persistent conflicts with the central government, however, have continued.

The agreement with Tatva was presented as a solution to the capital’s ever-pressing waste management issues, with formal plans to generate power by recycling the waste and improving existing waste management systems.

However, the agreement faced delays following the fall of the MDP government in 2012, with renegotiations initiated as the new government of Dr Mohamed Waheed sought more “mutually beneficial” terms.

Mayor Shihab told Minivan News in May that the latest delay to the project involved the failure of the finance ministry to fund the repair of equipment required as part of the deal.

Investor Confidence

Similar problems have beset other Indian investors in recent years, with a US$190 million housing project in Malé by India’s TATA group delayed for more than two years pending renegotiation of the original terms agreed with Nasheed’s MDP government.

Shortly after the project stalled in 2012, officials from Apex Realty reportedly told Indian media of fears that local politics were derailing their investments in the Maldives.

Negotiations were concluded last month and the project resumed, with the Indian High Commission in Malé confirming that the deal now had “firm assurances from both Government of Maldives and TATA Housing”.

The most prominent Indian project curtailed by the change in government was the US$511 million lease to develop Ibrahim Nasir International Airport, terminated in November 2012 after the contract was declared void by Waheed’s cabinet.

After GMR challenged the legality of the move in a Singapore court of arbitration, the contract was deemed “valid and binding”, leaving the Government of Maldives liable for damages. Though the figure owed is yet to be determined by the court, it is expected to be considerably less than the US$1.4 billion claimed by GMR.

A 2012 report in India’s Business Standard brought forward concerns by Indian companies operating in the Maldives over political interference which they companies claimed is derailing their substantial investments in the country.

Since assuming the presidency in November 2013, Abdulla Yameen made the introduction of special economic zones the flagship of his legislative agenda, passing the SEZ Act in August.

With a minimum investment of US$150 million required for any investment projects in the special economic zones, Adeeb – also chairman of the SEZ investment board – has suggested that just one of the government’s proposed mega-projects could diversify the Maldives’ tourism-reliant economy.

While no major deals have yet been signed, a team of Chinese surveyors are expected in the country this week to carry out a survey for Malé-Hulhulé bridge – a project mooted by successive administrations.


Government hands back Kaadehdhoo Airport to Villa Air

The government has returned Kaadehdhoo regional airport to Gasim Ibrahim’s Villa Air 38 days after terminating the contract with the tourism ministry.

Speaking to local news outlet Vnews, Managing Director Rilwan Shareef of Villa Air said that the airport had been handed back to the company by the government on Thursday (September 19).

Kaadehdhoo Airport, which is leased out to Villa for fifty years to develop and manage the airport, was taken by the government last month after it cited a breach of the agreement on Villa’s side.

The Villa Group – founded by Jumhooree Party (JP) leader Gasim Ibrahim – suffered adversely from a number of government decisions last month just as Gasim attempted to stall President Abdulla Yameen’s flagship Special Economic Zones Act.

President Yameen denied the setbacks for Villa had been politically motivated after the JP alleged that both these decisions and subsequent death threats received by Gasim had come from political opponents.

The handing back of Kaadehdhoo Airport comes within a week of the reinstatement of Maamigili Airport, also under the management of Villa Air, as an international airport after it was downgraded to domestic status due to security concerns.

A  nearby island which was leased out to the Villa Group for agricultural purposes was also taken by the government at the same time as the airport.


President Yameen hails passage of SEZ bill

President Abdulla Yameen has hailed People’s Majlis passage of flagship Special Economic Zone (SEZ) bill as an incentive for multi-million dollar investments in the Maldives.

The bill was passed with six minor amendments at an extended Majlis sitting at 10:54 pm on Wednesday night, with 60 MPs of the 85 member house voting in favor.

Opposition Maldivian Democratic Party (MDP) had proposed over 180 amendments, but all were rejected.

Speaking to the press today, Yameen said the SEZ bill dispels investor concern over short lease periods and legal protection.

“Investors willing to invest billions of dollars raise questions over land lease periods. If its 33 years, they are not interested in [investing]. This is why major investors lack interest in the Maldives. We cannot even hold discussions with such investors. We have now created the legal environment required to attract major investments. This creates such a framework,” he said.

People’s Majlis Speaker Abdulla Maseeh has also applauded the passage of the bill as an example of democracy, similar to that of American democracy.

The bill will be ratified after Attorney General Mohamed Anil reviews the bill, Yameen said.

Meanwhile, MDP MPs have contended the SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralization system, and authorize a board formed by the president to “openly sell off the country” without parliamentary oversight.

Speaking to the press after the Majlis session, MDP MP Rozaina Adam said the passage of the bill without any consideration to concerns raised by the opposition indicates the return to authoritarian rule.

“We now have a dictatorship here. The People’s Majlis, the presidency and the courts are all under one party,” she said.


The MDP proposed a large majority of the 245 amendments to the SEZ bill. These include revising a provision that allows leasing of land to foreign companies for 99 years to reduce lease periods and adding provisions to require 75 percent of jobs in the SEZs to be reserved for Maldivians.

The MDP also proposed companies with a 49 percent foreign shareholder stake to lease land instead of purchasing land.

It also proposed scrapping Article 74, which allows up to 40 percent of any zone to be tourism-related development with tax and duty exemptions.

Amendments were also forwarded for mandatory consultation with local councils ahead of declaring any region under council jurisdiction as an SEZ.

None of the opposition amendments passed.

The MDP had also proposed to return the bill to a committee for further review, although this proposition failed with 57 of 73 parliamentarians present voting against it.

Former ruling coalition partner Jumhooree Party (JP) previously claimed the SEZ law would facilitate massive corruption and undermine independence, but on Wednesday announced a three-line whip in favor of the bill.

The change in the party’s stance closely follows the state’s cancellation of various business agreements made with the JP leader’s business Villa Enterprises.

On Monday (August 25), the Civil Aviation Authority downgraded Gasim’s Villa International Airport based on the MP’s constituency island of Maamigili to domestic status.

Similarly, on August 14 the government terminated an agreement with Villa Air to develop and manage the regional airport on Gaaf Dhaal Kaadehdhoo, while the fisheries ministry has also decided to reclaim Laamu Atoll Baresdhoo from Villa, stating that the company had not used it for the agreed purpose.

“Castles in the air”

Former President Mohamed Nasheed had dubbed the legislation the ‘Artur Brothers bill’, referring to an infamous pair of Armenians linked with money laundering and drug trafficking who made headlines last year after they were photographed with cabinet ministers.

Nasheed has also dismissed SEZs and the touted mega projects as “castles in the air.”

Referring to the opposition to his administration’s public-private partnership projects on religious and nationalistic grounds – with opposition parties accusing the government of “selling off state assets” – in a speech at an MDP event on August 12, Nasheed argued that the current administration’s economic policies were far worse judging by their terms.

“There could be no bigger deception of the Maldivian people,” he said.

Nasheed also contended that Maldivian law would not be enforced in the SEZs, claiming that gambling would be allowed in the zones.


President Yameen accuses opposition parties of inciting unrest, sabotaging economy

President Abdulla Yameen has accused opposition parties of attempting to foment unrest and sabotage the economy in his address to the nation on the occasion of the 49th Independence Day.

Speaking after a flag-hoisting ceremony at Republic Square last night, Yameen said the government would not allow the country to be plunged back into turmoil while it was enjoying a period of calm and stability.

“Opposition political parties are deliberately trying to disrupt stability by creating a spirit of unrest in society,” he said, adding that incitement of such fervour in the past had repeatedly threatened the country’s independence.

“I do not believe that failing to achieve the love and consent of the public should be a reason to plunge the nation into a deep pit of hatred and strife.”

Opposition parties were pushing for a tourism boycott and attempting to convince fish importers to cease purchasing Maldivian fish in a “deliberate attempt to create distress and anxiety,” Yameen alleged.

He added that “attempts to weaken the country economically” was tantamount to threatening independence.

Yameen also condemned alleged “efforts to create doubts” in the minds of foreign buyers of Maldivian fish and an alleged campaign to boycott tourism.

The current administration would “defeat all efforts to impoverish Maldivian citizens, build a peaceful generation of youth, and go forward in securing prosperity for Maldivians,” he said.

Speaking at a press conference on July 16, Fisheries Minister Dr Mohamed Shainee had accused the Maldivian Democratic Party of attempting to “destroy” the fisheries industry after the main opposition party issued a statement condemning President Yameen’s fisheries policy.

Shainee dismissed the party’s contention that the industry was stagnating and appealed against spreading “false information” to international media, suggesting that the fisheries industry was “too fragile” to be made the subject of adversarial politics.

Meanwhile, Tourism Minister Ahmed Adeeb told Minivan News last month that the government’s “total focus” was on the economy.

“We are not running behind our political opponents and we have stopped political rhetoric now – we have stopped responding to that but we are responding to economic issues,” he said.

Development projects

President Yameen went on to outline his administration’s development plans, referring to the special economic zone (SEZ) legislation currently before parliament as integral to the government’s economic policy.

An SEZ law would ensure investor confidence, increase foreign direct investment, create job opportunities, and mitigate the dependence on the tourism industry, Yameen explained.

Once the SEZ bill is enacted into law, he continued, one of the first projects to be undertaken would be the Ihavandhippolhu Integrated Development Project.

The ‘iHavan’ project would become “the main gateway” for development and prosperity in the northernmost atolls.

Plans for Addu City includes development of both the Gan international airport and the Hithadhoo regional harbour to spur economic activity, Yameen said.

A ‘mega project’ for development of the southernmost airport was in the pipeline while the government has decided to transfer the regional harbour under the Maldives Ports Limited (MPL) for modernisation, he revealed.

MPL would also take over the regional port in the island of Kulhudhufushi in Haa Dhaal atoll, he added.

The formulation of a master plan for the development of the Ibrahim Nasir International Airport (INIA) was meanwhile ongoing in collaboration with Singapore’s Changi airport, Yameen noted.

The changes envisioned in the master plan include a new terminal and a new runway, he said.

Moreover, a contract has been awarded for dredging and reclamation of Hulhumalé for development of a ‘youth city in the artificial island as pledged during last year’s presidential election, Yameen said.

He stressed that the government would ensure that development projects would not threaten the country’s independence and sovereignty following criticism of the SEZ bill.

Yameen also revealed that criminal records have been cleared for 3,588 youth since he took office in November, adding that he has asked the newly appointed Prosecutor General Muhthaz Muhsin to introduce a new procedure to not prosecute first time offenders under an agreement signed with offenders.

Last night’s ceremony was meanwhile attended by former presidents Maumoon Abdul Gayoom and Dr Mohamed Waheed as well as senior statesmen – Abdul Sattar Moosa Didi and Ibrahim Rasheed – who worked with former President Ibrahim Nasir to secure independence from the British in 1965.


Comment: The scramble for the Maldives

This article first appeared on Dhivehi Sitee. Republished with permission.

The political changes that marked Maldives’ transition to democracy have not translated into equal distribution of wealth or access to basic public services such as clean water, health care, electricity, waste-management and sewage systems, throughout the country.

The rapid political changes and crises experienced in the past decade has done little to confound the popularized image of the Maldives as a hedonistic paradise for tourists, despite being considered ‘one of the most miserable countries in the world’ for its own citizens.

Continuing this story of two Maldives: the real and the represented, the Yameen government has submitted the Special Economic Zones (SEZs) Bill to the People’s Majlis. In doing so, the government is attempting to sell the illusory tale that liberalisation of trade by autocrats – granting incentives to multinational corporations (MNCs) – trickles wealth down to ordinary citizens.

President Abdullah Yameen Abdul Gayoom, brother of former strongman Maumoon Abdul Gayoom, announced plans to develop SEZs in April 2014 at an investor forum held by the Maldivian government in Marina Bay Sands, Singapore.

Notable investors such as US company Blackstone (which acquired a controlling interest in Maldivian Air Taxi “MAT” and Trans Maldivian Airways “TMA” in February 2013), Singapore-based HPL Hotels and Resorts, China Machinery Engineering Corporation (CMEC), the Carlson Group of Companies, Pan Pacific Hotels and Resorts, United Bunkering and Trading Group, and Singapore Enterprise were present at the forum.

The SEZs bill entails demarcation of specific geographic areas into zones where special customs regime and laws apply for investors and developers. Developers’ Business Profit Taxes (BPT) can be exempted, and Goods and Services Taxes (GST) are exempted initially for ten years, and can be withheld or exempted for additional years if the SEZs board allows.

Shareholders are exempt from paying BPT on their dividends, and tax relief can be afforded to developers through special procedures by the SEZs board. The SEZs board can also lease land in the Maldives to foreign companies for up to ninety-nine years and Maldivian companies are exempt from tax when acquiring ownership of land.

The SEZs defined under the bill include the following: Industrial Estate, Export Processing Zone, Free-Trade Zone, Enterprise Zone, Free Port, Single Factory Export Processing Zone, Offshore Banking Unit, Offshore Financing Service Centre, and a High Technology Park (Articles 9-18).Government officials have echoed Singapore, Hong Kong, Oman, Qatar and Dubai as examples of SEZs stimulating foreign direct investment.

China and India have been touted by the World Bank as proof of economic growth through introduction of liberal economic policies and legislations such as SEZs. Gradually, China and India began to structurally transform its economies in the 1980s and 1990s respectively, with its GDP growing at an annual average rate of 10% and 6% over the past two decades. In the case of China and India, although SEZs are associated with trade liberalization, studies have shown that it does not always result in human development, economic growth or liberalization of domestic markets (Leong 2013).

Speaking to the media in June 2014, the Minister of Economic Development Mohamed Saeed likened existing tourist resorts to SEZs, possibly to suggest how potentially profitable these policies could be.

Contrastingly, the recently published second Maldives’ Human Development Index report by the United Nations Development Project affirms that despite being lucrative and effective at enabling economic growth, the luxury tourism industry has not alleviated socio-economic inequalities, but rather contributed to it.

Speaking to local news website Minivan News, Tourism Minister Ahmed Adheeb defended the bill claiming that it is in line with decentralization, and that it will shift the focus away from the densely populated capital Malé.

However, a Facebook Community named The Maldivian Economist – a forum where economic and financial policies are discussed – has published a detailed refutation of the notions put forth by the government regarding the SEZs bill. The Maldivian Economist notes that the bill takes power away from the people – local government and elected officials, concentrating wealth under a “centralized autocratic government.” Although the bill purportedly aims to limit Maldives’ reliance on tourism income, it provides additional import duty, tax and foreign labor concessions specifically for hotel, tourism-related, and real estate businesses.

Primarily, the Bill aims to run nine types of SEZs. But the 17-member SEZs board called ‘the Board of Investments’ – made up of unelected government officials, including two presidential appointees – decides how many zones, and of which types would be set up across the Maldives (Article 22).

The bill affords the SEZs board the discretion to extend incentives, such as tax relief or increase the allocation of expatriates and migrant workers upon request. If the bill is enacted, it will prevail over existing laws (according to Article 80(b), 14 existing legislations to be exact) and regulations made prior to it.

Only special SEZ ‘facilitating’ regulations made by relevant governmental authorities, decisions and regulations made by the SEZs board, obligations cited under the developer’s permit, and terms and conditions stipulated under the investment agreement or concession agreement would be applicable within any SEZ (Article 33(b), Article 70).

Although the bill states that discussions shall be made between councilors, and that the Chairperson of the SEZs board and the Minister of Economic Development shall be answerable to the parliament, it does not afford government oversight any decision-making powers.

All the decision-making powers with regard to which investors attain development projects and which areas are designated SEZs is vested with the SEZs board and the President. The SEZs board also decides which existing tourism related businesses could be relocated into an SEZ. (Article 74(c)).

Under an authoritarian government, the SEZs board would end up assuming overwhelming wealth through developers, and in the absence of competition laws invisibilize local fishermen and entrepreneurs who call these SEZs home.

Once the President demarks an area as an SEZ, even if it currently belongs under the authority of a local council, its authority is transferred to the Ministry of Economic Development, as per Article 33(a) of the Bill. The Maldivian Economist states that this allows “all the revenue to bypass local councils and go into the state budget.” Article 37(b) of the bill states that if a development project aims to relocate island communities to the area being developed, the SEZs board has the discretion to grant the developer additional incentives.

The concession agreement with GMR Malaysia Airport Holdings consortium and the Nasheed administration signed in June 2010 to develop and run Malé international airport, was the largest foreign direct investment in the Maldives. The coup regime of Dr Mohamed Waheed Hassan Manik, which included members of the current government expelled India’s GMR citing ‘void ab initio’, but used religious rhetoric and an ultranationalist anti-India campaign to drive home the now debunked legal argument.

Due to the xenophobic GMR fiasco, it seems as if an entirely different government has submitted the SEZs bill, ready to embrace the globalized world economy.

The opposition Maldivian Democratic Party has dubbed the bill, “the Artur Brothers bill”, invoking top government officials’ links to famous Armenian gangsters, and possibility of increased money laundering due to offshore financing.

Resonating sentiments of SEZs critics, Salma Fikry, one of Maldives’ foremost experts on decentralisation and development, told Minivan News last week that, “it [SEZs bill] is not sustainable nor empowering for the Maldivian population.”

Canadian author Naomi Klein’s book “the Shock Doctrine: The Rise of Disaster Capitalism” is a literary indictment of the radically liberal free-market policies introduced by economists trained at the Chicago School of Economics.

In her view, policies espoused by Milton Friedman and his protégés world-over have historically exploited crises: “wars, terror attacks, coups d’état and natural disasters” in the developing world.

Post-tsunami opportunism during Gayoom’s dictatorship is also mentioned in Klein’s well-researched hypothesis. Following the 2004 Tsunami, with funding from the World Bank and other international bodies, the Maldivian government announced the Safe Island Program in order to relocate island communities.

Klein argues that the regime was merely “freeing up more land for tourism.” This argument is convincing as she notes, “in December 2005, one year after the tsunami, the Gayoom government announced that thirty-five new islands were available to be leased to resorts for up to fifty years.”

To a certain degree, the SEZs bill is similar to the Safe Island Program; it glorifies “the blank”, a country with special privileges and policies for MNCs and foreigners, void of its inhabitants. As the Maldivian Economist has noted, in the Maldivian context of escalating socio-economic disparities, and corruption within the judiciary, government and parliament, this bill will not enable the human development it envisions. Instead, it solely empowers the government and corporations associated with it.

These policies will do more harm than good to a small economy such as the Maldives, which does not have any existing legal barriers to foreign direct investment.


Majlis disrupted over Tourism Ministry corruption allegations

Today’s sitting of parliament was disrupted by ruling Progressive Party of Maldives (PPM) MPs during minister’s question time after opposition Maldivian Democratic Party (MDP) MP Ali Azim suggested that the Tourism Ministry was widely perceived as corrupt.

In a followup question posed to Tourism Minister Ahmed Adeeb, MP Azim asked whether corruption at the ministry was stalling mid-market tourism development in Addu City, prompting yelling and screaming from pro-government MPs.

In the ensuing disorder, MPs sprang from their seats and acrimonious arguments broke out between pro-government and opposition MPs, forcing Speaker Abdulla Maseeh Mohamed to adjourn proceedings less than 15 minutes after they had begun.

However, unlike yesterday’s sitting – which was eventually cancelled after disruption forced a halt in the morning session – today’s sitting resumed at 11:30am and preliminary debate began on government-sponsored amendments to the Child Protection Act.

When the sitting resumed with Deputy Speaker Moosa Manik presiding, MDP MPs raised several points of order objecting to being denied the opportunity to question the minister.

As the ruling coalition had majorities on government oversight committees, MDP MP Rozaina Adam noted that the opposition party could not summon ministers for questioning at committee, leaving the 30-minute minister’s question time at sittings the only avenue to hold the executive accountable.

MDP MPs accused pro-government MPs of deliberately disrupting proceedings to prevent opposition MPs posing questions to the minister.

Deputy Speaker Moosa Manik, however, ruled that the minister’s question time had elapsed and urged MPs to allow the sitting to proceed.

Tourism in Addu City

Tourism Minister Adeeb was summoned to today’s sitting to answer a question tabled by MDP MP for Addu Maradhoo, Ibrahim Shareef, regarding plans for developing guest houses and infrastructure in the southernmost atoll.

In response, Adeeb said Addu City would have 5,000 tourist beds at the end of the current administration’s five-year term, which would ensure development of the whole atoll.

Addu City would be part of the first special economic zone (SEZ) created by the government’s flagship legislation currently before parliament, Adeeb added, which would also include Gaaf Alif, Gaaf Dhaal and Fuvahmulah.

“So when the development plan comes through [the SEZ], we see that Addu City will be the gateway for the whole [southern] region,” he said.

Adeeb argued that SEZs with tax exemptions and other incentives for investors were necessary to develop the Maldives, suggesting that policies were needed to make other regions of the country more attractive to potential investors.

Investors could not be drawn with the current rate of US$8 per square meter to lease state-owned land for tourism development, he added, noting that the area around the Equatorial Convention Centre also required foreign investment.

Investors “would surely come” if they were offered “tax breaks” for five or ten years to invest in SEZs, Adeeb suggested.

The tourism minister also declared support for the guest house tourism initiative undertaken by the opposition-controlled Addu City Council.

Development of resorts in uninhabited islands and plots of land “in the periphery” would provide sources of liquor and water sports to guests, he said.

The number of tourism beds in Addu City is currently 1,094.

Adeeb told Minivan News last month that contrary to criticism of the SEZ bill, one of the objectives of the legislation was to develop tourism outside the central atolls or the ‘seaplane zone’.

“Even you see even President Nasheed’s guest houses, it’s getting centralised in Malé because it’s more feasible here,” he explained.

“I believe that by doing the SEZ Act, we will bring the investment to these regions and this is the real decentralisation of investments.”


Comment: SEZ bill opens doors for economic slavery

The government has said President Abdulla Yameen’s flagship Special Economic Zone (SEZ) legislation would bring an end to the Maldives’ dependence on tourism. The bill aims to create jobs, and stimulate investment in the Maldives’ underdeveloped atolls and bring in long term development.

However, the special incentives and tax breaks to corporations and limited oversight in the bill paint a different picture – SEZs will only institute a system of economic slavery in the Maldives.

The bill proposes handing over control of the Maldives’ atolls to corporations, and suggested lax regulations will allow money laundering, and increase corruption and inequality. It may also become a tool for resort owners to legally evade taxes.

What are SEZs? They are specific geographical areas within a country’s borders with relaxed regulations, financial incentives, and facilities to attract investment and create jobs.

The Maldives has plans to set up nine zones, including free trade zones, offshore finance zones, high-tech zones, and ports. The SEZs are to be administered by a 17-member board consisting largely of government officials.

Incentives for SEZ developers include exemptions from import duty, Business Profit Tax (BPT), Goods and Services Tax (GST), and withholding taxes, and concessions in bringing in expatriate workers. There are no regulations on money remittance, and the bill also provides for land lease periods up to 99 years. Further, any company with a majority of local owners (51 percent) can buy and own land without paying land taxes.


Local communities may not receive any benefits from investments in SEZs. According to Article 33, once an area is designated an SEZ, local councils will no longer have authority over the area. All the revenue will bypass local councils and go into the state budget. This may mean the end of decentralization in the Maldives.

It suggests and propels a move towards a centralised autocratic government. Moreover, atolls of the Maldives will be controlled by business tycoons rather than elected representatives.


The freedoms in money remittance without government oversight and single window clearance for various government approvals could result in a reduction in finance and trade controls, opening up opportunities for money laundering and financing of terrorism. For the same characteristics that make SEZs attractive to legitimate businesses, also attract abuse by illicit actors.

The SEZ bill allows the SEZ board to override all controls in proposed in the bill. The board can add a number of additional incentives such as extended tax relief, extended land lease periods for foreign companies up to 99 years and increase foreign labor quotas. Such excessive power in the board’s hands will lead to corruption, inequality and may result in the rich controlling SEZs with very little scope for future entrepreneurs.

Tax Evasion

The proclaimed purpose of the SEZ bill is to attract investment in other industries, but the bill, in fact, grants excessive benefits and tax relief to the tourism sector.

Article 74 states up to 40 percent of investment in any special economic zone could be in tourism or tourism related industries. Hoteliers will not have to pay import duty on capital goods, and will be exempted from paying Goods and Services Taxes (GST), Business Profit Taxes (BPT) and withholding taxes for two years. Shareholders will not have pay BPT on their dividends, and companies will be granted concessions in employing expatriate workers.

All of these concessions can be extended further and land taxes can be waived on the recommendation of the SEZ board.

Maldives already attracts multi-million dollar investments and international brands in the tourism sector under existing laws, and the sector already makes vast profits. There are already many top international hotel brands in the Maldives, we do not need SEZs to ensure investor protection or attract investors in the tourism sector. If these businesses had not been sure of their investments, they would not have invested in the Maldives in the first place.

The incentives granted for the tourism sector in the SEZ bill means most of the investments in the SEZs will end up as tourism investments, and will allow resort owners to legally evade taxes.

According to MIRA’s records, the government’s main source of income at present is Tourism Goods and Services Taxes (TGST) and BPT, and the main sources of dollar income are TGST and other tourism sector taxes. The tax reliefs and exemptions will reduce TGST, BPT, and other tourism taxes, which will in turn reduce state income and dollar income.

Ultimately, the reduction in the state’s income means an increase in debt and deficit, whilst reduction in the state’s dollar income would hand over control of the dollar market to tourism tycoons.

As the Maldives currently lacks a set minimum wage, and as developers in the SEZ have the right to bring in any amount of expatriate workers, most of the SEZ jobs will also go to expatriates preventing locals from benefiting at all.

President Yameen has previously pledged to create 94,000 job opportunities. The SEZ bill will create jobs, but only for foreigners?

Wealth concentration

A majority of Maldivians live without clean water, proper sewerage systems or medical and educational facilities. We are a rich country with a small population, but 90 percent of our wealth is concentrated in the hands of a mere 10 percent.

In the context of high inequality, high corruption and incompetent courts, the SEZ bill may very well hand over ownership of this country’s resources to a handful of corporations. Corporations end to be driven by power and financial gain, and in the absence of oversight, will not work for the public good.

History had shown a correlation between huge investments and corruption and civil unrest. These investments ultimately help authoritarian governments to stay in power by buying off their citizens. Investors will fund the governments who provided them with profit-making opportunities to buy off their citizens.

Laws that are made in the interest of corporations and business tycoons result in economic slavery. Corporations want profits and the best way for them to get the profits is to use political party campaign financing system i.e. a system of legalized bribery. This way they can control government officials, politicians, and the public.

They use those government officials and politicians to dismantle the marketplace, to obtain monopoly control, and ultimately privatise the commons. The SEZ bill allows corporations to turn our wealth, our air, our water, our public lands, our wildlife, and our fisheries into profit.

The Maldivian Economist is a Facebook Group which aims to create a platform for debate on the Maldivian economy, finance and policies.

Photo courtesy of Rajjetherey Meehunge Party.

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