Tag: special economic zone (SEZ)

Feasibility study underway for iHavan project

US-based Boston Consulting Group (BCG) has launched the first phase of the iHavan project feasibility study.

Economic development minister Mohamed Saeed said yesterday that a team of specialists from BCG has started the “traffic-modelling” for the project, which he said is one of seven components to be completed in three months.

The government hired BCG as a project consultant in November last year.

Saeed told Haveeru that the American company will conduct a detailed study to determine how the components proposed by the government could be developed. The company will consult with boat building, bunkering, and docking companies, he said.

“Then we will know how a cruise terminal, bunkering, and docking can be developed in the Ihavandhippolhu seven degree channel,” he was quoted as saying.

The Ihavandhippolhu Integrated Development Project (iHavan) envisions the development of a special economic zone (SEZ) with relaxed regulations and tax incentives in the Maldives’ northernmost atoll.

The project involves the development of a transhipment port, an airport, offshore docking and bunkering facilities, an export processing zone, real estate businesses, and tourism facilities.

The iHavan project is also one of the government’s five ‘mega projects’ launched at an investment forum in Singapore last year. Earlier this month, a group of Saudi Arabian investors reportedly visited Ihavandhippolhu.

The Saudi Arabian government has also provided US$1 million as grant aid to finance the feasibility project.

Saeed has previously said that he Maldives could capitalise on its strategic location and the “trillions of dollars” worth of trade that passes through the seven degree channel.

The project also proposes to take advantage of more than 30 large cities which lie within a 4000km radius of the atoll as an export processing zones established in iHavan will enjoy duty free access to 1.7 billion people under the South Asian region the South Asian Free Trade Arrangement (SAFTA).

In March, the government signed a Memorandum of Understanding with Dubai Ports World to relocate the central commercial port from Malé to the industrial island of Thilafushi and develop the port as a free trade zone.

The government said at the time that a joint venture agreement will be signed with the global marine terminal operator in a month, but negotiations appear to have stalled.

The opposition has criticised the government’s failure to attract significant foreign investment despite assurances with the passage of the SEZ Act in August last year.

The government estimates that it will collect US $100 million in acquisition fees from the SEZs by August 2015.

Tourism minister Ahmed Adeeb told Minivan News in April that the government is “looking for serious investors,” noting that the minimum investment for a SEZ stands at US$ 150 million.

“I think we will meet budget targets. Some investors are prepared to pay a US $100 million acquisition fee on a single project,” he said.

The first SEZ project is likely to be the Thilafushi port project with Dubai Ports World, Adeeb said, followed by the iHavan project.

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MDP submits over 300 amendments to SEZ bill

The opposition Maldivian Democratic Party (MDP) has submitted more than 300 amendments to the government’s flagship special economic zone (SEZ) legislation, currently in the final stage of the legislative process.

Briefing the press on the proposed revisions (Dhivehi) yesterday, MDP MP Rozaina Adam appealed for the public and local councils to urge pro-government MPs to vote for the amendments.

The ruling Progressive Party of Maldives (PPM) and coalition partner Maldives Development Alliance (MDA) have 48 seats in the 85-member People’s Majlis.

The MDP contends that an SEZ law would pave the way for money laundering and other criminal enterprises, undermine the decentralisation system, and authorise a board formed by the president to “openly sell off the country” without parliamentary oversight.

The party also objects to exempting investors from paying import duties or taxes for 10 years as well as allowing companies with foreign shareholders to purchase land without paying sales tax.

The government, however, maintains that SEZs with relaxed regulations and tax incentives were necessary both for foreign investors to choose the Maldives over other developing nations and to launch ‘mega projects,’ which President Abdulla Yameen has said would “transform” the economy through diversification and mitigate the reliance on the tourism industry.

Following the submission of a report (Dhivehi) by the economic affairs committee after reviewing the legislation, the third and final reading of the bill began at today’s sitting of parliament.

MDP MPs proceeded to propose and second the amendments, which would be put to a vote individually ahead of a final vote on passing the bill.

Amendments

MDP MP Ibrahim Shareef explained yesterday that the main changes proposed to the bill include removing a provision to allow companies with a 49 percent stake held by foreign shareholders to purchase land.

The article would be changed to allow such companies to lease the land in lieu of ownership, he noted.

Moreover, a provision allowing leasing of land to foreign companies for 99 years would be revised to reduce the lease period.

The party further proposed adding a provision to require 75 percent of jobs in the SEZs to be reserved for Maldivians.

In line with Article 41 of the Constitution, Shareef said an amendment was proposed to require “fair and adequate compensation” to be paid for private property acquired by the state.

The MDP also proposed scrapping Article 74 of the draft legislation, which allows up to 40 percent of any zone to be tourist-related development with tax and duty exemptions.

Moreover, Shareef said an amendment was proposed to prevent resorts under development from being declared an SEZ.

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

On provisions for offshore banking, Shareef noted that an amendment was proposed for the Maldives Monetary Authority or central bank to exercise oversight over the financial services.

MDP MP Ibrahim Mohamed Didi – a retired brigadier general – meanwhile proposed an amendment banning any form of gambling or casinos in the SEZs.

He also proposed outlawing the construction of churches or temples for the worship of other religions as well as any such congregation in the SEZs.

Shareef contended that the party’s amendments would not obstruct the operation of the zones “fairly and without corruption in a way that would benefit the country”.

MP Rozaina explained that the other amendments were intended to hold the government accountable through parliamentary oversight.

An amendment was proposed requiring parliamentary approval for the president’s appointees to the investment board.

Moreover, amendments were proposed to include either an opposition MP or one member from each political party represented in parliament on the investment board.

Responding to opposition criticism of the SEZ bill last week upon returning from a visit to China, President Yameen noted that the constitution allows for “freeholds” and leasing of land for 99 years.

Article 251(b) of the Constitution states, “A foreign party shall not receive a lease of, or be given in any other way, any part of the territory of the Maldives for a period exceeding 99 years.”

Large foreign investments of US$300 to US$400 million would not be made if the lease period was any lower, Yameen argued, adding that “freehold rights” were offered for 99 years in developed nations.

Referring to the ‘iHavan’ transhipment port project  in Ihavandhippolhu, Yameen noted that the creation of SEZs would involve significant land reclamation while other areas that would be designated as SEZs were presently not utilised.

“So if it is MDP or anyone else talking about it, we are going to go forward with this work. God willing, it will go forward. And God willing, the special economic zone bill will be passed,” he said.

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JP and MDP MPs boycott committee reviewing SEZ bill

Jumhooree Party (JP) and Maldivian Democratic Party (MDP) MPs boycotted parliament’s economic affairs committee today in protest of alleged procedural violations by the committee’s chair in his haste to complete reviewing the government’s flagship special economic zone (SEZ) legislation.

Progressive Party of Maldives (PPM) MP Abdulla Khaleel – the committee’s chairperson – was “repeatedly violating Majlis rules and committee rules as well,” said JP Leader Gasim after walking out of a meeting this morning and raising a point of order at the ongoing parliament sitting.

The SEZ law would authorise a board formed by the president “to sell off the entire country in the name of economic zones,” the business tycoon said.

He added that the committee was not considering recommendations by state institutions concerning relaxed regulations, exempted import duties and tax incentives.

PPM MPs wanted to complete assessment of the bill “like a snap of the finger,” he said.

Speaker Abdulla Maseeh Mohamed, however, said he could not accept Gasim’s objections as a point of order and advised the Maamigili MP to submit a complaint outside the sitting.

Backing Gasim’s stance, MDP MP Eva Abdulla – who had walked out of the committee with Gasim – contended that procedural violations at committees must be dealt with by the speaker.

As the “smallest example” of Khaleel’s misconduct, Eva alleged that the chair was participating in votes while the rules stipulate that he could only cast a vote to break a tie.

The chair was completely “disregarding” recommendations and commentary sent to the committee by the Maldives Police Service, Customs Service, Local Government Authority, and Maldives Monetary Authority, Eva claimed.

Moreover, the views of JP and MDP MPs were deliberately being ignored, she added.

Parties in the minority should be respected, she continued, warning of disruptions to proceedings at parliament sittings if the issue was not resolved.

In a second point of order, Gasim said he would not stand for the PPM misusing its parliamentary majority to get its way in flagrant violation of rules.

If the SEZ bill is passed into law without revisions, Gasim said the country’s “independence would be lost” and “certain people” would be allowed to carry out corrupt dealings.

PPM MP Riyaz Rasheed meanwhile advised resolving the dispute through dialogue in lieu of disrupting proceedings with quarrels in the chamber.

Shortly after the second session of today’s sitting resumed at 11am, Speaker Maseeh adjourned proceedings in the face of consecutive points of order raised by JP and MDP MPs.

Fast-tracking

Khaleel had told newspaper Haveeru last week that he expected to complete the review process and send the bill to the Majlis floor for a vote before the end of the month.

Parliament breaks for a one-month recess at the end of August.

As the bill was a high priority for the government, the MP for Faafu Nilandhoo said he had decided to hold two meetings for every day when there is a parliament sitting.

Khaleel had stressed that stakeholders would be consulted and technical expertise would be sought.

Prior to walking out of today’s meeting, Gasim advised that it was “very important” to specifying a period for offering tax incentives to investors instead of leaving it to the discretion of a board.

Eva meanwhile objected to PPM MPs refusing to “accommodate” any recommendations from state institutions and urged the chair to “respect parliamentary practice.”

In response, Khaleel insisted that he was conducting proceedings in accordance with the rules and that comments that were “not against the spirit of the bill” were being considered.

After the JP and MDP MPs walked out, Khaleel continued the review process – with PPM MPs and coalition partner Maldives Development Alliance (MDA) Leader MP Ahmed ‘Sun’ Siyam Mohamed in attendance – and put articles 34 through 48 to a vote after seeking proposed amendments.

Reflecting its simple majority in the 85-member house, the PPM-MDA coalition has voting majorities on parliamentary oversight committees.

Meanwhile, responding to criticism of the SEZ bill from the opposition, President Abdulla Yameen insisted in a speech on Monday night (August 11) that foreign investments in the zones posed no threat to Islam or Maldivian sovereignty, assuring that the businesses would be fully subject to Maldivian law.

Former President Mohamed Nasheed contends that the zones would be used for criminal enterprises, “irreligious” activities such as gambling, and money laundering.

The opposition leader 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.

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Foreign investments pose no threat to Islam or sovereignty, insists President Yameen

Foreign investments pose no threat to either Islam or Maldivian independence and sovereignty, President Abdulla Yameen said last night, assuring that the creation of special economic zones (SEZs) was no cause for concern.

“It does not mean casinos will be operated in the Maldives, and it does not mean the president would have more power than he should,” Yameen said in a speech at a function held by the Maldives Inland Revenue Authority (MIRA) to celebrate its fourth anniversary.

Yameen insisted that foreign investments would be fully subject to Maldivian law while sovereignty would extend to the SEZs.

The government’s flagship SEZ legislation – which envisions free trade zones with relaxed regulations and tax incentives – has come under fire from the opposition with former President Mohamed Nasheed contending that the zones would be used for criminal enterprises, “irreligious” activities such as gambling, and money laundering.

The opposition leader 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 had also argued that the government would have less authority in the SEZs than the authority it exercised in Addu Atoll Gan Island during British occupation.

Corruption

Yameen and GasimBriefing MPs on parliament’s economic affairs committee yesterday – which is reviewing the SEZ bill – MP Mohamed ‘Kutti’ Nasheed reportedly sought to allay fears that SEZs would facilitate corruption.

The ruling Progressive Party of Maldives MP – who was involved in drafting the legislation – explained that the bill includes mechanisms to prevent corruption and take legal action in accordance with the UN  International Convention against Corruption.

Provisions were included for terminating agreements with investors if an act of corruption is proved, he added.

Nasheed also suggested that other issues such as a ceiling for investments and extending incentives to developers in addition to investors could be addressed at the committee stage.

Speaking at the committee, Jumhooree Party Leader Gasim Ibrahim expressed concern with the legislation conferring excessive authority to the president, which he warned could be used to favour or “destroy” businesses.

The absence of a ceiling limit for investments was a threat to existing enterprises, Gasim argued, as the president could “take some dollars and create economic zones to enrich three or four people.”

The business tycoon, however, said he supports passing the bill with revisions.

MP Ahmed Siyam Mohamed – owner of the ‘Sun Siyam Resorts’ and leader of the government-aligned Maldives Development Alliance – urged expediting the passage of the bill as an SEZ law would allow “stalled investments” to resume.

Foreign banks were not lending for investments in the country at present, Siyam said, but development banks would be established along with the SEZs.

The economic committee’s chair said last week that he expects the review process to be completed before the end of the month, after which the bill would be sent to the Majlis floor for a vote. 

New frontiers

Yameen meanwhile said last night that the Maldives should emerge from its “small crab hole” into the wider world.

The government’s efforts to generate income to create job opportunities and provide education and healthcare was “not a big ask,” he said.

The country should have the courage and capacity to forge ahead, he added, and “face new things.”

The government’s efforts were geared towards “economic transformation” through diversification and fostering a “business-friendly environment” for both domestic and foreign entrepreneurs.

While increasing tourist arrivals was “natural economic growth,” Yameen explained that the objective was to “transform” the economy from the present “production frontier” to a higher level.

The “main beneficiary” from economic diversification and ‘mega projects’ would be the state, Yameen added, as tax revenue would increase and job opportunities would be created.

The Ibrahim Nasir International Airport currently caters for about 1.5 million passengers, he continued, but the government’s target was developing the airport to serve “five to seven million passengers.”

Implementation of the mega projects – such as the ‘iHavan’ transhipment port – would “transform the economic landscape,” Yameen suggested.

The government was also reviewing framework agreements for “avoidance of double taxation” to ensure that “corporate leaders” from neighbouring countries with investments in the Maldives are not taxed twice, Yameen revealed.

While the government’s focus was on the economy instead of partisan politics, Yameen stressed that political stability and a low crime rate were among the “basic ingredients” for economic transformation.

Reiterating the government’s focus on youth development, Yameen said the Maldives needed to move away from a culture of “criminalisation” of trivial offences to encouraging youth and “giving them conviction” and employment opportunities.

The younger generation was “the energy of the economy,” he added.

In a speech earlier this month, Yameen point to the country’s “motivated”, “highly intelligent” and “easily trainable” youth as a key resource for economic growth.

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Chamber of commerce vice president slams economic development minister

Vice President of the Maldives National Chamber of Commerce and Industry (MNCCI) Ismail Asif has severely criticised Economic Development Minister Mohamed Saeed, questioning his “sincerity” and “competence”.

Asif told the press on Thursday (August 7) that Saeed lacked “vision,” discriminated among local businesses, and had not been able to attract foreign investment.

The relationship between the ministry and the chamber of commerce has deteriorated during Saeed’s tenure, Asif reportedly claimed.

Saeed has not provided necessary information regarding a loan scheme for small and medium-sized enterprises (SMEs), Asif added.

He went on to accuse the minister of “corruption” in appointing businessmen of his choosing to business-related committees formed by the ministry.

Declaring the chamber of commerce’s backing for the government’s flagship special economic zone (SEZ) bill, Asif, however, questioned Saeed’s ability to implement the legislation when it is signed into law.

He added that Saeed had not consulted local businessmen before the bill was drafted and submitted to parliament.

However, Asif praised the government for proposing the SEZ bill early in its five-year term and expressed support for its provisions, arguing that it would expand the domestic economy and spur growth.

If income generated from the SEZs was evenly distributed among the populace, Asif said it would benefit the public and raise standards of living.

He also dismissed criticism that SEZs could be used for money laundering and criminal enterprises, suggesting that it was not directly linked to the establishment of such zones and advised control measures.

Parliament’s economic affairs committee is currently reviewing the SEZ legislation and has set itself a deadline of October 10 to complete the assessment and possibly make revisions.

However, MP Abdulla Khaleel – chair of the committee – told newspaper Haveeru today that he expects the review process to be completed this month, after which the bill would be sent to the People’s Majlis floor for a vote.

Parliament breaks for a one-month recess at the end of August.

As the bill was a high priority for the government, the Progressive Party of Maldives MP for Faafu Nilandhoo said the committee has decided to hold two meetings for every day when there is a parliament sitting.

He stressed that stakeholders would be consulted and technical expertise would be sought.

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