Tag: special economic zone (SEZ) legislation

SEZ bill sent to Majlis floor as MDP continues protest

Parliament’s economic affairs committee completed its review of the government’s flagship special economic zone (SEZ) legislation yesterday and sent the bill to the People’s Majlis floor with minor revisions.

While Jumhooree Party (JP) and opposition Maldivian Democratic Party (MDP) MPs had boycotted meetings last week, the committee resumed the review process yesterday after JP Leader Gasim Ibrahim assured cooperation for continuing the assessment.

However, Gasim and JP MP Abdulla Riyaz reportedly left the meeting later and the bill was voted through with only MPs of the ruling Progressive Party of Maldives (PPM) and coalition partner Maldives Development Alliance (MDA) in attendance.

Reflecting its combined 48 seats in the 85-member house, the PPM-MDA coalition has voting majorities on key oversight committees.

Among the amendments brought to the draft legislation, a provision was added to include an MP on a 17-member investment board, which would demarcate and oversee the SEZs.

JP and MDP MPs had walked out of a committee meeting last week alleging procedural violations by the committee’s chair – PPM MP Abdulla Khaleel – and objecting to his alleged refusal to incorporate recommendations made by various state institutions.

The MPs in the minority accused pro-government MPs of deliberately disregarding their input.

Khaleel told newspaper Haveeru yesterday that suggestions from state institutions were included to the extent that “the bill’s main concept would not be lost”.

“Dangerous”

MDP MPs did not attend yesterday’s committee meetings.

Last week, the main opposition party announced protests against passing the bill in its current form, warning of “dangerous” consequences, contending that it would pave the way for drug trafficking, money laundering, and human trafficking.

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

Meanwhile, at a press conference on Saturday (August 16), PPM Parliamentary Group Leader Ahmed Nihan accused opposition MPs of obstructing implementation of the government’s economic policy.

The majority leader urged MDP MPs to respond to technical aspects of the bill in lieu of “misleading” political rhetoric.

The government 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.

Yameen has also dismissed concerns with the absence of parliamentary oversight in the legislation – such as requiring parliamentary approval for presidential appointees to the investment board – arguing that that leasing islands or plots of land was the prerogative of the executive and that affairs of governance was outside the Majlis’ mandate.

Filibuster

At today’s sitting of parliament, MDP MPs raised consecutive points of order – for nearly half an hour – contending that the committee completed its review with unprecedented and undue haste after ignoring the views of opposition MPs.

PPM MPs meanwhile urged Speaker Abdulla Maseeh Mohamed to exercise his authority to expel unruly MPs.

However, unable to continue with the day’s agenda, Speaker Abdulla Maseeh Mohamed adjourned proceedings twice.

Following the adjournment, the MDP parliamentary group informed the press that its MPs were protesting in the chamber against efforts to “silence” the minority party as well as the fast-tracking of the SEZ bill review despite assurances from the speaker that opposition concerns would be heard.

At a press briefing yesterday, MDP MP Ibrahim Shareef said pro-government MPs did not allow opposition MPs to amend the draft legislation and insisted that the review process was conducted “dictatorially” in violation of parliamentary rules.

Shareef had warned that MDP MPs were willing to bring Majlis sittings to a halt over the SEZ bill.

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

Following last night’s rally, a group of protesters took to the streets and demonstrated in front of President Yameen’s private residence.

The MDP has also launched a petition (Dhivehi) calling on the government to withdraw the SEZ bill, warning that it would “destroy” the decentralisation system as the president could bypass local councils, declare any region an economic zone, and lease land for a period of 99 years.

In addition to import duty and tax exemptions for investors, an SEZ law would allow the president to “divide and distribute various regions of the country” to businesses of senior government officials, the party claimed.

Moreover, companies with foreign shareholders would be able to purchase land without paying sales tax, the MDP noted, which would pose a threat to national security.

“This would be selling off the country’s natural resources dubiously on the cheap for the benefit of a few people,” reads the petition.

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Government takes back Kaadedhoo airport, uninhabited island from Gasim’s Villa Group

The government has terminated an agreement with Jumhooree Party (JP) Leader Gasim Ibrahim’s Villa Air to develop and manage the regional airport on Gaaf Dhaal Kaadehdhoo.

Director of Regional Airports Sami Aqeel told newspaper Haveeru that the agreement was terminated today because Villa breached its terms. Further details would be revealed to the press in a statement, he added.

Local media also reported today that the government has decided to reclaim the island of Baresdhoo in Laamu atoll from Villa. The uninhabited island had been leased to Gasim’s company for agriculture.

An official from the fisheries ministry told the local daily that the lease period had expired last month. He explained that the ministry has decided not to renew the lease because Villa had not done any farming on the island.

The ministry has decided to hand over the island to the tourism ministry to be leased for resort development, the official revealed.

The moves by the government comes on the heels of the business tycoon’s stringent criticism of the government’s flagship special economic zone (SEZ) legislation at yesterday’s sitting of parliament.

After boycotting the committee reviewing the legislation, Gasim warned 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.”

Business interests

Gasim’s Villa Group is one of the largest companies in the Maldives with the holding company Villa Shipping and Trading Pvt Ltd conglomerate operating businesses in shipping, import and export, retail, tourism, fishing, media, communications, transport and education.

The agreement with Villa Air to operate the airport for a period of 50 years was signed during the final days of former President Dr Mohamed Waheed’s administration.

Former Transport Minister Dr Ahmed Shamheed – filling a JP slot in cabinet at the time – was sacked in November 2012 after extending the lease of the privately-owned airport in Maamigili for 99 years.

In March 2013, Dr Shamheed told Minivan News that President Waheed wanted “credit” for extending the Maamigili airport lease.

Despite the dismissal, the decision was not reversed and Shamheed was replaced by JP Deputy Leader Ameen Ibrahim, who signed the Kaadehdhoo agreement on behalf of the government on November 6.

Following his third-place finish with 23.37 percent of the vote in the November 2013 presidential election, Gasim initially announced that the JP would remain neutral.

However, the JP’s council decided to endorse Abdulla Yameen against MDP candidate, former President Mohamed Nasheed, three days before the second round of the polls on November 16.

After the contesting the parliamentary polls in March jointly through the Progressive Coalition, the ruling Progressive Party of Maldives (PPM) severed its coalition agreement with the JP after Gasim stood for post of Majlis speaker despite the PPM fielding its senior MP Abdulla Maseeh Mohamed.

In the wake of the coalition’s breakup, President Abdulla Yameen sacked Transport Minister Ameen and other JP political appointees, whilst cabinet ministers on slots assigned for the JP – Environment Minister Thoriq Ibrahim and Economic Development Minister Mohamed Saeed – joined the PPM.

Home Minister Umar Naseer – appointed as part of the coalition agreement with the JP – is meanwhile facing criminal prosecution on charges of disobedience to order.

Following the loss of two JP MPs last month, Gasim claimed at a press conference that the MPs had told him that the government had threatened to cease development of islands in their constituencies.

Gasim said he had heard that the pair were offered MVR10 million (US$648,508) each for the transfer. The PPM has denied offering any incentives to the MPs.

Gasim also claimed to have provided MVR20 million (US$1.2 million) as financial assistance to the PPM’s parliamentary campaign.

In July, the JP meanwhile announced its intention to sue two MPs who switched to the ruling PPM.

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MDP to protest against “dangerous” SEZ bill

The Maldivian Democratic Party (MDP) has declared its intention to protest against the governments flagship special economic zone (SEZ) legislation, warning that passing the bill would pose serious dangers to the Maldives.

“We note that the bill on special economic zones in its current form would allow the government to conduct transactions broadly with no transparency and no opportunity for oversight, as a result of which the possibility of losing the country’s independence and sovereignty would be high,” read a press release from the main opposition party yesterday.

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.’

The MDP noted that its lawmakers along with Jumhooree Party (JP) MPs boycotted the economic affairs committee yesterday – which was in the process of reviewing the draft legislation – in protest of procedural violations by the committee’s chair and “dictatorial” actions of pro-government MPs.

MDP and JP MPs also objected to the economic committee allegedly disregarding recommendations and commentary on the bill sent by various state institutions.

Reflecting its combined 48 seats in the 85-member house, the ruling Progressive Party of Maldives and coalition partner Maldives Development Alliance have voting majorities on key parliamentary oversight committees.

After walking out of a committee meeting yesterday, JP Leader Gasim Ibrahim warned 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.”

Incentives

The MDP press release warned that an SEZ law would allow the government to bypass local councils, declare any region an economic zone, and lease land for any period.

The law would undermine the Decentralisation Act and restrict the authority granted by the constitution for local councils to “raise funds,” “own property and incur liabilities,” the party contended.

Geographic areas declared an SEZ would be removed from the jurisdiction of local councils.

However, Tourism Minister Ahmed Adeeb told Minivan News in June that an SEZ law would encourage further development of tourism outside of the central atolls or the ‘sea plane zone’ – referring to the proximity from Malé’s international airport – and assured that councils would be consulted.

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

The MDP also expressed concern with the tax breaks offered to investors in SEZs, which it argued would limit opportunities for small and medium-sized enterprises.

Concessions in the current draft include tax exemptions and relaxed regulations for employing foreign labour.

Investors would be exempted from paying either import duties for capital goods or business profit tax, goods and services tax and withholding tax for a period of 10 years.

Regulations on foreign workers would be relaxed while companies with foreign shareholders would be allowed to purchase land without paying privatisation fees or sales tax.

Article 74 meanwhile allows up to 40 percent of any zone to be tourist-related development with tax and duty exemptions.

Moreover, private airports and seaports in the zones would be outside the jurisdiction of the Maldives Customs Service.

The enactment of an SEZ law would pave the way for “dangerous and serious crimes,” the MDP press statement continued, such as drug trafficking, money laundering, and human trafficking.

“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 Tuesday night (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 Abdulla Yameen meanwhile 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.

The government’s objective was “economic transformation” through diversification – to mitigate the reliance on the tourism industry – and shifting the economy from its “present production frontier” to a higher level, Yameen explained.

Yameen had declared in April that the SEZ bill would become “a landmark law” that would strengthen the country’s foreign investment regime.

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