Sixty resort islands in limbo after political turmoil strikes CSR programme

The government has refuted local media reports that it is considering halting the lease of 60 islands award for resort development by the former administration.

The islands in question were to be leased under a Corporate Social Responsibility (CSR) tourism programme initiated by the former government. The programme faced heavy criticism from the start, especially from opposition figures now senior officials in the current government.

Critics alleged that the CSR programme was against the law as the islands were awarded in the absence of an open bidding system, and had favored Maldivian Democratic Party (MDP) members.

The National Planning Council (NPC) – formed by the previous government and currently “under review” – leased islands for resort development to interested individuals, with the condition they undertook a development project on an inhabited island, such as building water and sewerage systems.

The development project had to be completed to an “acceptable level” on an island of the government’s choice within an allocated time frame, before the resort would be leased for development. In addition, the resort would be owned by a joint-venture company formed between the state and the resort developer,  with the government holding a five percent share of the company.

The NPC had awarded contracts to at least 10 parties to develop 10 different islands. The fate of these contracts are still unclear as the potential resort developers await a decision by the government. The government, in turn, claim to be waiting for the Anti-Corruption Commission (ACC) to make a decision.

“The issue is not in our hands now. There are some legal issues to be addressed. Even the 10 islands with contracts might be cancelled. We will decide on it once the ACC gives its recommendations,” said the Minister of Tourism, Ahmed Adheeb.

Meanwhile,  local newspaper Haveeru on Monday reported a “prominent” tourism ministry official stating that the government had decided not to lease the islands awarded “without bids”, in line with the ACC’s recommendations on the issue. Around 60 of the awarded islands will no longer to be leased, according to Haveeru.

“We have decided to cancel the proposals of the islands without agreements. In addition, a decision pertaining to the islands where agreements have been made will be taken after the ongoing discussions with the ACC,” the official told Haveeru.

President of the ACC, Hassan Luthfy denied reports that the commission had specifically ordered the NPC to discontinue the CSR programme.

“During the former administration, we recommended the NPC award all projects within an open bidding system. It did apply to the CSR programme but we did not specifically ask for the CSR projects to be stopped,” Luthfy told Minivan News.

The ACC began investigating the CSR programme in May 2012 and a decision is yet to be made.

Speaking to Minivan News, member of the NPC and former Economic Minister Mahmoud Razee defended the CSR-programme.

“The  programme did not break the law. The tourism law allows two options by which resort islands can be leased: either through the bidding system or by the government holding a share of the company owning the leased resort,” said Razee.

He further claimed the CSR programme was more egalitarian and would enable more people to be involved in the tourism industry, rather than just those with access to large upfront capital.

“The programme was completely open for anyone to apply. It was conducted in a very transparent manner. It was also more efficient than the bidding system where people would just put down huge amounts of money and then later be unable to develop the resort. Even now there are about 60 islands awarded through bids that are still not developed,” he said.

“The CSR programme cuts down the initial costs for developers and gives more people the opportunity to own resorts,” Razee explained.

‘Sim’ Ibrahim Mohamed, one of the individuals awarded an island and under the CSR programme, agreed.

“According to tourism law there is no need for an open bid if the government has a share in the resort. The whole motivation behind the theme of the CSR programme was very noble. It was a very sound, well thought-out policy by the previous government,” said Ibrahim.

In contrast to the bidding system which “always favored people who already had money”, the CSR programme “made everyone equal in terms of the ability to enter the tourism industry as an owner,” he explained.

The CSR programme also opened a doorway for Small and Medium Enterprises (SMEs) to enter the tourism industry, said Ibrahim.

In addition, he said that leasing islands to resort developers in exchange for providing basic facilities on inhabited islands, such as water and sewerage system,s was “a very good way of doing it”, taking the country’s economic situation into consideration.

Asked  how the current limbo state of the CSR programme would affect investor confidence in the country, Ibrahim noted “well, in this instance, the investors ran away.”

“This government has been in power for over 100 days and still nothing has happened. We don’t know. We are waiting, the investors are waiting. So it is just money lost, it is opportunity lost. It’s not only investors’ confidence but also financial institutions such as banks that lend you money.”

Although the government has not reached a decision yet, it still remains skeptical about the CSR programme.

“I don’t think the people who got the resorts have the financial capacity to conduct the projects in the islands,” said tourism minister Adheeb. “There are no documents with any evidence of their funds.”


MATI sues as government seeks Supreme Court legal counsel on spas, pork and alcohol

The government has asked the Supreme Court for a “consultative opinion” on the legality of spa operations and sale of pork and alcohol in resorts, claiming that legal clarity is needed to properly address the current controversy involving Islam and the tourism industry.

The government last week ordered resorts to shut down their spa operations, and announced it was considering a ban on pork and alcohol. The announcements were made in response to five demands made during a demonstration organised by a coalition of NGOs and opposition parties on December 23 to ‘Defend Islam.’

Maldives Association of Tourism Industry (MATI) meanwhile filed a case at the Civil Court yesterday challenging the Tourism Ministry’s order to shut down massage parlors and health spas in resorts.

Speaking to local media, Attorney General Abdulla Muiz said, “We believe that the people have expressed genuine concerns over the circular issued by the Tourism Ministry ordering resorts to close down their spas.

“Investors will have confidence when they are clear of the judiciary’s position on these issues.”

The Attorney General was unavailable for comment at time of press.

Although the import of alcohol and pork to the Maldives is allowed under a regulation, there is no regulation or set of guidelines specific to spa operations in resorts.

The State, however, claims that Article 15(a2) of the Goods and Services Tax Act clearly stipulates that spas are legally accepted in the Maldives as tourism goods.

Under the article, “goods and services supplied by diving schools, shops, spas, water sports facilities and any other such facilities being operated….at tourist resorts, tourist hotels, tourist guest houses, picnic islands, tourist vessels and yacht marinas authorised by the Tourism Ministry” are tourism goods.

Officials at the Supreme Court and President’s Office were unavailable for comment today.

MATI Secretary General Sim Ibrahim Mohamed was unable to comment on the case in the Civil Court, but said that the government’s decision had incurred “irrevocable damage” to the tourism industry and had become a “legal issue to which we are trying to find legal clarity.”

“We are trying in the lower courts while the government has filed at the Supreme Court to see what this is about. We need to know whether the Maldives can legally provide tourism services within the confines of the constitution,” he explained. “A lot is riding on the court verdicts.”

Sim conceded that the verdicts would not close the discussion. “As to whether the public or the opposition parties will accept the verdict is not for us to say. They will have to weigh their own agendas against what is good for the economy at the moment,” he said.

Former Attorney General and lawyer representing MATI, Aishath Azima Shukoor, said the case addressed two key points: that the government’s decision to close the spas violates the contracts it holds with resort operators, and that the timing is unconstitutional.

Shukoor pointed out that the contracts between the government and resort operators include a clause entitling the operators to the peaceful operation of land leased. She maintained that the government had violated the agreement by closing operations without presenting any substantial reports, investigation or evidence justifying the action.

MATI has also applied for an injunction. If granted, resort spas would be allowed to operate until the court case is concluded.

Shukoor said MATI was hoping for a hearing on Wednesday, January 4, but that nothing has been confirmed.

Complaints that the tourism industry compromises the Maldives’ status as a 100 percent Muslim nation have brewed for some time, but the protests in “defense of Islam” in December 2011 threw officials into the crucible of religion, politics and tourism currently before higher and lower courts.

Article 10 of the Maldivian constitution states that “Islam shall be one of the basis of all the laws of the Maldives” and prohibits the enactment of any laws “contrary to any tenet of Islam”.

Although members of the coalition defending Islam originally called for the closure of “the spas and massage parlors and such places where prostitution is conducted”, as well as a reversal of a policy which permits the sale of alcohol on areas declared “uninhabited islands” – such as in Addu City and Fuvahmulah were the government plans to build city hotels – the government’s all-or-nothing response has driven those members to alter their position.

After telling a gathering of thousands that “The only road we must follow is based on Allah’s callings,” Jumhoree Party Leader and tourism tycoon Gasim Ibrahim sued the government when it closed spa operations in five of his Villa Hotels resorts over allegations of prostitution.

Upon realising that the protests had prompted the UK to issue a travel advisory, and after refusing to answer an inquiry about rumors that Taliban members had entered the country to participate in the protest, religious Adhaalath Party said it “calls on the international community to visit Maldives without any fear, assures that there is no terrorism in the Maldives, and that it will never give space to terrorism in this country.”

The statement further assures the international community that Maldivians are capable of protecting tourists.

Speaking to Minivan News today, Adhaalath Party chief spokesperson Sheik Mohamed Shaheem Ali Saeed did not wish to comment on an ongoing court case but called on the government to take national decisions slowly.

“Maldivian people have no problem with the tourism industry. The Maldives is the best country in the Islamic world with dealing with non-Muslims. Doctors, teachers, all are living here in Maldives and we have nothing against them. The thing is social problems are increasing daily, and people are concerned,” he said.

Minivan News asked whether it was worth risking the tourism industry in the name of Islam.

“Everyone knows the tourism industry is the backbone of our national economy. That’s why no one wants to damage any side of the tourism industry in the Maldives. I am 100 percent sure there is no prostitution in the tourism industry here. It is very professional, it is the most famous tourism industry in the world and is accepted by the international community. Why would we want to attack ourselves?”

Shaheem recommended that the industry foster alcohol-free resorts to develop the nation’s economy and add variety to the tourism sector. “In 2011 there was a project with a company from Dubai trying to do an alcohol-free resort. And I know there are resorts not selling pork,” he observed.

Minivan News asked whether it was acceptable for the government to support resorts which do sell alcohol and pork.

“This is a religious issue, and it is in the Supreme Court, so I can’t talk about this issue,” Shaheem said, adding that he could not say whether the court verdicts would settle the matter.

The Tourism Ministry announced earlier this week that it was considering revising the ban on spa operations in resorts.