The National Social Protection Agency (NSPA) has announced savings of MVR20 million (US$1.3 million) in electricity subsidies due to the steep fall in international oil prices.
Haveeru reported NSPA CEO Mujuthaba Jaleel as saying that the agency had provided a monthly average of MVR81 million (US$5.3 million) in subsidies last year, with this month’s outlay expected to fall by 25 percent.
International oil prices plummeted from US$100 per barrel to US$80 in just three months late last year, while current prices have dipped below the US$50 mark per barrel.
Mujuthaba also said that the recently announced re-registration of people wanting electricity subsidies – between February 10 and April 9 – would result in a further reduction in costs.
The re-registration comes after the government announced it would start providing targeted subsidies for food and electricity in order to ease the state budget deficit.
Parliament passed amendments to the Public Finance Act today reversing changes brought to the law in 2010 requiring parliamentary approval for obtaining loans, providing sovereign guarantees, and leasing or selling state assets.
During the final debate at today’s sitting of the People’s Majlis, opposition Maldivian Democratic Party (MDP) MP Ibrahim Mohamed Solih said he believed the government should have “the power and discretion” to obtain loans and conduct its programmes.
However, the MDP parliamentary group leader objected to scrapping a provision in the public finance law that prohibits expenditures in excess of funds allocated in the annual budget.
If Article 34(b) is abolished, Solih said the finance minister would not have to ensure that spending was in line with the budget approved by parliament.
If MVR800 million (US$51.8 million) was allocated to the police, Solih explained that the finance minister could approve MVR1 billion (US$64.8 million) for the institution.
“The purpose of passing the budget would be completely lost if this article is abolished,” he said.
Following the debate, the government-sponsored amendments (Dhivehi) were passed with 41 votes in favour, 25 votes against, and one abstention.
While Jumhooree Party MP Hussain Mohamed proposed adding clauses to require the government to provide information concerning loans and financial assistance to parliament within 45 days, neither amendment passed after pro-government MPs voted against the proposals.
The MP for Mathiveri had argued that the current law would not hamper the daily functions of the government as a decision to take a loan or provide a sovereign guarantee would not be made “one morning at the office”.
On the issue of delays in securing parliamentary approval, Hussain noted that the economic affairs committee completed its review of the amendments in two and a half hours.
“So what is the delay here? [The amendments] will be passed today. It has probably been just a week since it was submitted,” he said, noting that pro-government MPs were in the majority.
He further urged pro-government MPs to read Majlis minutes from 2010 to see how then-opposition leaders spoke in favour of the amendments.
Progressive Party of Maldives (PPM) MP Jameel Usman meanwhile said parliament unduly assuming executive powers would pose difficulties in providing services to the public.
“Our responsibility should not be stopping things but monitoring,” he said.
Restrictive
Last week, Finance Minister Abdulla Jihad told parliament’s economic affairs committee that the government faced serious difficulties due to the requirement to seek parliamentary approval before obtaining loans.
Similar requirements did not exist in any other country, he added.
Jihad referred to a loan obtained from the Bank of Maldives during President Dr Mohamed Waheed’s administration without parliamentary approval as Majlis was in recess at the time and the funds were needed to pay salaries of government employees.
Meanwhile, in May, President Abdulla Yameen suggested that the requirements of the public finance law were hampering the functioning of the executive.
The government was forced to seek parliamentary approval “even for a MVR1,000 (US$65) loan,” he said.
Yameen contended that laws imposing “various restrictions” on the executive were passed by the previous People’s Majlis due to the “irresponsibility” of the former head of government.
Yameen, who was leader of the minority opposition People’s Alliance at the time, said Nasheed’s “selling off of state assets and giving up uninhabited islands” had prompted the opposition’s actions.
“When many such actions that were harmful to the public occurred, a group of people advocating as the people’s representatives – myself included – determined things that cannot be done without a say of the parliament and passed a law called the Public Finance Act to hold the government accountable,” he had said in May.
Following the controversial transfer of power in February 2012, the new administration – made up of former opposition parties – sought to reverse the restrictions concerning the sale and lease of state properties.
The parliamentary debate on the budget proposed for 2014 began today with MPs of the opposition Maldivian Democratic Party (MDP) calling on the newly-elected coalition government to fulfil its campaign pledges.
MDP MP Ali Waheed urged the new administration to submit its legislative agenda to parliament and incorporate its policies in next year’s budget.
“Very big promises have been made to the people. Our grandmothers and grandfathers want MVR5,000 (US$325) in their accounts at the end of this month, MVR5,000 each, so total MVR10,000 if it’s a couple.
“Each of our citizens want a doctor in our homes at the end of the month [as pledged by the PPM]. They are clearing out the room intended for the guesthouse for the new doctor. Our fishermen are expecting MVR10,000 a month subsidies (US$650). Fishing is not too good right now,” he said.
Referring to the Progressive Party of Maldives’ (PPM) pledges to raise the old age pension and designate a doctor for each family, Ali Waheed said the opposition party would vote for a budget that reflected the campaign promises.
“Our responsibility is to be the people’s eyes in this Majlis. People want us to watch over and hold this government accountable,” the MDP deputy parliamentary group leader said.
Most MPs suggested that the new government should be able to submit a revised budget based on the PPM manifesto.
Speaker Abdulla Shahid explained that amendments brought to the Public Finance Act stipulates that the budget must be submitted by the end of October. Parliamentary rules however allow the government to “include components of their new budget” through the Budget Review Committee, he said.
Reappointed Finance Minister Abdulla Jihad told local media today that the government did not plan to submit a supplementary budget or reduce recurrent expenditure but would propose changes to the Public Sector Investment Program (PSIP).
Jihad stressed that the proposed revenue raising measures should be approved by parliament to finance new infrastructure projects.
The measures include hiking T-GST (Tourism Goods and Services Tax) to 12 percent from 8 percent, revising import duties, deferring abolishing the tourism bed tax for one more year, raising the airport departure charge from foreign passengers from US$18 to US$25, leasing 12 islands for resort development and introducing GST for telecommunication services (currently exempt from the tax).
During today’s debate, MP for Shaviyani Kanditheemu, Mohamed Hussain, who left the Dhivehi Rayyithunge Party (DRP) in April and remains an independent, said there were “serious problems” with the budget and that 2013 was an “empty year” for his constituency.
None of the projects included in the 2013 budget for the islands he represent was carried out this year, he said, while some have been omitted from the 2014 budget.
Former President Dr Mohamed Waheed laid the foundation stones for a new school and mosque in Shaviyani Feydhoo in January, he added, but the projects did not commence and were not included in next year’s budget.
DRP MP Hassan Latheef, who represents the Hithadhoo south constituency in Addu City, said there were no projects for the southernmost atoll apart from establishing water and sanitation systems.
Latheef objected to only MVR45 million (US$2.9 million) allocated for Addu City, which he contended was disproportionate for a population of 32,000.
MDP MP Mohamed Riyaz meanwhile expressed concern with the PPM backtracking on its pledges, by claiming that campaign banners with these promises were put up by supporters rather than the party itself.
Pro-government MPs
PPM MP Abdul Azeez Jamal Abubakur appealed for new sources of revenue and cost-cutting measures to be included in the budget.
Azeez also noted that projects in the 2013 budget for his constituency in Laamu Maavah did not proceed and have been omitted from next year’s budget.
PPM MP Ahmed ‘Redwave’ Saleem urged the government to reduce MVR2 billion (US$129 million) from recurrent expenditure, which accounts for 73 percent of government spending.
PPM MP Abdulla Raheem Abdulla meanwhile thanked opposition MPs for assuring their assistance and cooperation to the new administration.
The PPM deputy leader also said that the budget had to be revised for the PPM to deliver on its campaign pledges. He added that the government would provide the financial benefits that were promised.
“The budget has to be prepared in a way that we can fulfil the promises,” he said.
Several MPs expressed concern with the high recurrent expenditure compared to capital investments. While the projected revenue for 2014 is MVR13.9 billion (US$901 million), recurrent expenditure – wages, subsidies and administrative costs – stands at MVR12 billion (US$778 million).
The budget deficit is estimated to be MVR988 million (US$64 million) or 2.5 percent of GDP, according to the Finance Ministry.
Following a week of fundraising events the Health Ministry has raised over 5.5 million MVR (US$357,142) for the Health Trust Fund established in late April, falling short of the MVR 270 million (US$ 17,532,450) needed for health sector services.
The Health Trust Fund was established 20 November 2012 under Ministry of Finance and Treasury regulations and inaugurated on April 29, 2013.
The only way the Health Trust Fund can be maintained is through donations of sufficient assets and in this regard government and private sector contributions are very important, Minister of Health Dr Ahmed Jamsheed recently told local media.
He explained that the health sector requires an additional MVR 270 million (US$ 17,532,450), which requires public contributions and cooperation.
Previously health sector services were “covered by the people”, however following the start of the Aasandha universal health insurance scheme on 1 January 2012 the government of Maldives needed a “huge amount of finance” to cover expenses, said Jamsheed.
Therefore, the Health Ministry organised a series of fundraising events to “commence activities to raise funds, not to gather all the funds need to cover all health sector services,” he added.
“We want health services to be sustainable by putting an end to service disruptions due to machinery breakdowns as well as provide a systematic way for people to give in-kind donations,” Health Ministry Director and fundraising media team member Thasleema Usman told Minivan News yesterday (June 8).
“There has always been a budget shortfall at the Health Ministry, there has never been enough money,” Usman said.
“We wanted to try and do something for the Maldivian people, additionally there are also people who want to contribute [to the fund] for the benefit of the public,” she added.
Usman explained that the various fundraising events were organised as a start for the trust fund and to raise awareness among the public.
“We didn’t want this to be a ‘once off’ thing,” she said.
“Although the total amount of funds raised are still being tallied, as of this afternoon (June 9), the total reported was MVR 5.5 million (US$357,142), with over MVR 2 million (USD$129,870) in cash donations and more than MVR 3 million (US$194,805) from in kind contributions,” Maldives Food and Drug Authority (MFDA) Senior Scientific Officer and fundraising media team member Mariyam Shabeena told Minivan News today (June 9).
Budgetary needs
The health sector budgeted MVR 2.2 billion (US$142,857,000) for 2013, however around MVR 1.1 billion US$71,428,500) or 50 percent of the total budget is allocated for the National Social Protection Agency (NSPA), according to Usman.
She said that over MVR 5 million is needed for social safety net subsidy programs, such as single parent’s allowance, foster parent’s allowance, disability registration and benefit and electricity subsidies, which fall under NSPA.
NSPA is also responsible for managing the national social health insurance scheme, a public-private partnership with Allied Insurance.
“Aasandha requires 1.13 billion MVR (US$73,376,550) to provide actual health care,” Usman said.
“An additional MVR 500 million (US$32,467,500) is required for Indira Gandhi Memorial Hospital (IGMH) operations and the Health Ministry budget also includes institutions, such as the Maldives Food and Drug Authority (MFDA), National Drug Agency (NDA), etc,” she continued.
Usman explained that the health trust fund will be transparent, with legal mechanisms to manage the money.
“The Health Ministry can only have a sustainable trust fund if funds are raised legally, by abiding with Finance Ministry regulations,” she said.
“The fund has a very well written policy that explains how the money will be used and what has been used,” Usman continued.
“A nine member committee chaired by the Health Minister will oversee the fund, which has a grading system to determine where funds are need most.”
Members of the public making contributions can earmark their donations for a particular island or association, but the trust fund committee needs to know what is being earmarked so contributions are not wasted, Usman added.
Events
“We have received a lot of support from the media, they have been a very, very big help,” said Usman.
A one hour telethon pre-show was broadcast nationwide from June 1 – 7 on four TV stations – MBC, VTV, DhiTV, Raajje TV – and three radio stations – MBC, VTV, DhiFM to raise awareness about the fundraising events.
“The broadcast reports showed where we are, the assistance required, and the grand realities of how the Health Ministry spends their budget,” Usman explained.
The actual telethon was held Saturday ( June 8 ) from 6:00am to midnight. It was kicked off with a sponsored walk along one of Male’s main thoroughfares.
Additionally, two charity football matches were held in Male’s National Stadium Friday (June 7), with Maldivian media presenters facing off against film stars.
The film star women’s team was victorious, winning 4 – 0 , while the men’s media team won 3-0 after dominating overtime penalty kicks.
Proceeds from ticket sales and t-shirt purchases also contributed to the Health Ministry fund.
Furthermore, a Children’s Evening fundraising event was also held at Male’s Children’s Park (Kudakudinge Bageecha).
Donation boxes were also placed at ferry terminals in Male’, as well as IGMH, regional and atoll hospitals.
“Ultimately these events were very successful because we were able to raise so much money,” said Usman.
The International Monetary Fund (IMF) has urged the government to implement a raft of measures to raise revenue and reduce spending to rein in a ballooning fiscal deficit.
In a statement on Monday following a visit by an IMF mission for the 2012 Article IV Consultation – the organisation’s “regular exchange of views with member countries” – the IMF team noted that strengthening government finances was “the most pressing macroeconomic priority for Maldives”.
“The fiscal deficit is expected to rise in 2012 to 16 percent of GDP [Gross Domestic Product] in cash terms, and likely even higher if one accounts for the government’s unpaid bills, accumulated in an increasingly challenging environment for financing,” the IMF mission stated.
In April 2012, the head of a previous IMF mission to the Maldives told Minivan News that the country’s fiscal deficit was “substantially understated” at less than 10 percent of GDP as projected in the 2012 budget, predicting a figure closer to 17.5 percent of GDP or higher.
“The large deficit has implied a rise in the public debt ratio, which now stands at over 80 percent of GDP, and has also helped to boost national imports, thus worsening dollar shortages in the economy and putting pressure on MMA [Maldives Monetary Authority] reserves,” the more recent IMF mission said in its statement.
The forecast for the current account deficit was “nearly 30 percent of GDP this year.”
“Gross international reserves at the MMA have been declining slowly, [and] now account for just one and a half months of imports, and could be more substantially pressured if major borrowings maturing in the next few months are not rolled over,” the IMF mission warned.
Recommendations to formulate “a realistic and prudent budget for 2013” meanwhile included hiking T-GST (Tourism Goods and Services Tax) and “selectively” reversing import duty reductions.
“On the expenditure side, electricity subsidies can be better targeted to the needy, costs of the health programme Aasandha can be further rationalised and reduced, wages should be controlled, including through the establishment of a Pay Commission, and a plan could be laid out for medium-term civil service reform.”
The mission suggested that tighter monetary policy could “help support the exchange rate and the needed external adjustment.”
“Higher Treasury bill yields, in conjunction with some technical changes to the monetary operations framework, may also help to ease the government’s financing difficulties,” the mission noted.
“Finally, resorts’ foreign-exchange licenses could be restricted to small-value amounts to help channel dollars through the formal banking system.”
Economic growth in 2012 was meanwhile expected to slow to three and half percent on the back of “depressed tourist arrivals earlier in the year and weak global conditions,” which have been “only partially offset by strong performance in construction and fisheries-related manufacturing.”
Inflation was “elevated on account of increases to GST and international food prices but is expected to slow to under 6 percent next year and decline further thereafter.”
Following consultations with President Dr Mohamed Waheed Hassan Manik, Finance Minister Abdulla Jihad, members of parliament and MMA Governor Dr Fazeel Najeeb, the mission noted that “the authorities have expressed an interest in a Staff Monitored Programme,” for which further discussions would be held.
The mission said it would prepare a report for consideration by the IMF Executive Board in January 2013.
“Rationalising”
Following the visit of the IMF team from October 30 to November 12, head of the mission Koshy Mathai met the press at the MMA auditorium on Monday.
Mathai revealed that the mission had recommended increasing T-GST to 15 percent, noting that “the Maldives takes a smaller tax from tourism industry than other small nations such as Fiji, Mauritius, and Seychelles, who are heavily dependent on tourism.”
However, unlike the other countries, Mathai said, “rich tourists visit the Maldives. For them, an increase in prices will not be a deterrent.”
However, most of the measures have not been implemented. Appealing for cooperation from government offices to reduce their budgets, Finance Minister Jihad told Minivan News in September that “everyone should tighten their belts.”
Jihad told local media yesterday that the ministry accepted the recommendations and would work with parliament to implement the measures in next year’s budget.
Mathai meanwhile observed that government subsidies on foodstuff imported by the State Trading Organisation (STO) benefited rich and poor alike.
“The resorts are buying these staple foods at highly subsidised prices,” he noted.
Moreover, the government’s universal health programme Aasandha needed changes to reduce costs, Mathai suggested, such as “moving to generic drugs and controlling payments that are made to foreign hospitals.”
“Harmonising” the pay scale
Mathai also stressed the importance of instituting a Pay Commission to streamline the pay structure for government employees.
“We have a lot of independent institutions in this country and they are all on different pay scales,” he observed.
“There’s no harmonisation within the public service. There are radically different pay scales. And that has problems in terms of incentivising staff to belong to one institution versus the other. And it also implies a lot of cost for the government. So establishing a Pay Commission that can set up a rational system of compensation for the entire public service seems like a priority.”
As part of an alternative “bottom-up approach,” Mathai revealed that the new government has completed “a detailed jobs analysis in many ministries.”
The analysis was intended to identify “where more staff need to be hired and [whether] some staff can be let go” as well as to determine “the best way of rationalising the size and composition of the civil service to make it deliver services most efficiently for the Maldives.”
In the medium term, said Mathai, a policy of population consolidation could ensure that service provision and administrative costs were “not duplicated.”
“To us that seems like a very logical thing, a very logical way of reducing costs, but of course it has to be done in a voluntary way,” Mathai said.
Economic diversification was also necessary to ensure that the economy has “more than one or two bases to go forward and reduce vulnerabilities to risks,” he added.
According to a report by the World Bank in May 2010 – which identified the dramatic growth of the public sector wage bill as the origin of the Maldives’ ongoing fiscal imbalances – increases to the salaries and allowances of government employees between 2006 and 2008 reached 66 percent, which was “by far the highest increase in compensation over a three year period to government employees of any country in the world.”
“Between 2004 and 2009, the average monthly salary of a government sector worker increased from MVR 3,223 (US$250) to MVR 11, 136 (US$866),” explained a UNDP paper on achieving debt sustainability in the Maldives published in December 2010.
Former President Maumoon Abdul Gayoom responded to growing calls for democratisation with “a substantial fiscal stimulus programme” of increased government spending, “much of which was not related to post-tsunami reconstruction efforts.”
“This strategy led to a large increase in the number of civil servants from around 26,000 in 2004 to around 34,000 by 2008 or 11 percent of the total population. Thus the government simultaneously increased the number of public sector workers as well as their salaries,” the paper noted.
Consequently, recurrent expenditure – wage bill and administrative costs – exceeded 82 percent of total government spending in 2010.
However, the new government’s efforts to enforce pay cuts of up to 20 percent and downsize the civil service – which employs a third of the country’s workforce – were met with “a severe political backlash from parliament,” the UNDP paper observed.
Introducing an economic reform package in late 2011, former President Mohamed Nasheed’s administration insisted that increased revenue from new taxes would match expenditure, and boasted that the 2012 budget was the first in many years to balance income and expenditure.
Monetary policy
Meanwhile, on the recommendation to raise rates on T-bills to finance government spending, Mathai suggested that if the government was “willing to pay higher yields, maybe the banks would be willing to subscribe.”
Mathai cautioned against loosening monetary policy “when dollars are at short supply and the local currency is under some pressure, as it has been for years.”
“Loosening the policy means pushing the economy to grow faster, creating more import demand, creating more demand for dollars – you don’t want to flood the system with rufiyaa so that people can bid many rufiyaa for each dollar in the parallel market,” he explained.
“Rather, you want to absorb the rufiyaa so they can’t bid so many rufiyaa and parallel market rates come down.”
The IMF mission also believed that financial supervision of the banking system “could definitely be strengthened,” Mathai said, suggesting that “some leeway recently given in terms of provisioning requirements for banks could be rolled back and banks should be required to comply with the original rules, which were tougher.”
On regulatory measures that could be taken to alleviate the dollar shortage, Mathai suggested “making sure that resorts that are dealing with foreign exchange don’t have unrestricted licenses to deal with any amount of money.”
Resorts should be “restricted to small value transactions that are appropriate for the visitors that are staying there,” he said.
“We would basically see how the government is doing against its own targets – it would set targets for itself for performance of these different economic areas – and then if the track record is built up and things are going well, then maybe later we could discuss having a programme where money is disbursed,” Mathai said.
Asked about the previous administration’s decision to float the rufiyaa – which the IMF praised as “a bold step” – Mathai said the IMF’s “fundamental suggestion had always been, and remains, to tighten the fiscal deficit.”
The dollar shortage could not be tackled without reducing government spending, he explained, because “devaluation alone will never succeed.”
“What happened last year is basically that the fiscal position didn’t really improve – it improved in cash terms, but you know a lot of bills were not paid,” he said. “So really there wasn’t any tightening of fiscal policy. I think that’s the fundamental reason why devaluation was not as successful as it could have been.”
The viability of the Maldivian tuna fishing industry is being threatened by the mass harvesting of fish stocks by foreign fishing vessels just outside the country’s exclusive economic zone (EEZ), Minivan News has learned.
Fishing is the Maldives’ second largest industry after tourism, and the country’s largest employer. The sustainability of centuries-old ‘pole and line’ fishing methods is not only considered a source of national pride, but also attracts buyers from premium supermarkets in the UK and Europe.
“We have noticed a decline in skipjack tuna due to the operation of purse seniers, mainly French and Spanish, along our EEZ,” Fisheries Minister Dr Ibrahim Didi tells Minivan News. “We have heard they are using FADS (Fish Aggregation Devices) across a very big area.”
Purse seining is a fishing method whereby a vessel deploys an enormous net to encircle and capture entire schools of fish at once. The method is very cost effective but indiscriminate, and generates a large amount of bycatch.
It is particularly efficient used in conjunction with FADs. Fish such as tuna are naturally attracted to the floating object, such as a buoy, typically fitted with a sonar device capable of determining the quantity of fish below, and a satellite uplink that communicates this to the nearby fishing vessel. The vessel’s net does not discriminate between the predators and scavengers attracted by the target fish population around the FAD.
“Nothing escapes,” says Solah Mohamed, Head of Production for the Maldives’ Felivaru fish cannery, which was opened in 1982 in collaboration with a Japanese company.
“Just outside the Maldivian EEZ are thousands of FADS, with sonar and live tracking systems. There are so many deployed that the natural migration of the skipjack is changing,” he says. “Fish that are supposed to migrate into Maldivian waters are being stopped because so many FADS are deployed.”
Solah claims the FADs are deployed by purse seines belonging “mainly to Spain, France and Japan, and also Iran.”
The Maldivian fishing fleet is simply unable to compete due to its reliance on pole and line fishing methods, says Solah, “one of the most sustainable methods of fishing.”
“The issue is that purse seines have become so efficient – and their sizes are becoming huge – as large as 100-400 tons. They say the sonar detects dolphins, but I don’t think it sounds very effective. Sharks, dolphins, turtles – they take everything. I doubt they can be bothered to sort it all out before pulling it on board.”
The under-resourced Maldivian coastguard is unable to monitor the vastness of the Maldivian EEZ, and local fishermen rarely go beyond the 100 nautical miles (the EEZ is 200 miles).
However the issue is not one of legality or of policing capacity. Many vessels at least in the EU fleet are fitted with vessel tracking devices ensuring they do not stray into Maldivian waters. But in international waters, almost anything goes – and seeking to hold foreign countries to account for over-exploitation is near impossible.
“We may as well be under siege,” a senior government source told Minivan News, of the ring of vessels surrounding the country.
Officially, the government is more diplomatic. “This is happening on the high seas and not in our EEZ, so there is very little we can do to raise our concerns,” says Fisheries Minister Dr Ibrahim Didi.
“Purse seiners are operating without limitation in the Indian Ocean near our EEZ, and the Indian Ocean Tuna Commission (IOTC) has not taken any measures against it.
“Since we became a full member of the IOTC we have tried to raise the issue and talk with neighbouring countries to take a joint stand. But the IOTC is dominated by European countries.”
Solah from Felivaru has observed the same problem: “We are just becoming a full member, but Japan, Spain and France are big players in the Commission. I have been to one of their conferences and I feel that their voices are heard more than those of the coastal islands. They have more expertise and they can put forward more resolutions, more numbers – we simply don’t have the expertise to beat them.”
A fish aggregation device, or FAD
Last gasps of the tuna catch
Meanwhile, the pole and line catch in the Maldives is in decline.
Felivaru’s Deputy General Manager Mohamed Waheed observes that the Maldivian tuna catch has fallen from “very high” figures in 2005-2006 “to now less than it was in 1995-1996.”
“The main thing is that the pattern of fishing changed. May to August is the low season, but we can usually still catch fish in the southern waters of the country. But this season it did not happen – we had hardly any fish in the north, and very little in the south.”
The foreign purse seines have not reported a declining catch, notes Solah.
“In commercial fishing we talk about ‘catch’ and ‘effort’,” he explains. “The Maldivian catch is going down but according to the IOTC, the purse seine catch is stable. This means the purse seines have hugely increased their effort.”
Value-adding means employment
Felivaru buys fish from local fishermen, canning, labelling and adding value to the commodity prior to export. The company has high demand for its product from upmarket UK supermarkets such as Waitrose, but has been forced to scale down its production lines because it just cannot buy enough fish.
“We are now processing 15 tonnes per day. We can go up to 50 tonnes if we can get the fish – but our cannery has had to scale down because we don’t get enough,” says Solah.
That has impacted employment: “At the beginning of 2008 we employed 1100 employees,” says Waheed. “Four years later we’re down to half that – 550 workers. And all these people are going to lose their jobs when the fisheries collapse.”
“Maybe tourism brings the most money to the country, but fisheries still provides most of the jobs. It accounts for more than half the employment of the entire country,” he explains.
A question of economics
Former head of the Maldives Industrial Fisheries Company (MIFCO), Adhil Saleem, now the country’s Transport Minister, attributes the decline in local fisheries to the industry’s struggle to meet global pressures and remain competitive.
He espouses a pragmatic, free market view. Marketing the Maldives’ pole and line fishing as a premium ‘eco’ brand pleases environmentalists and looks fine on paper, he explains, “But our gains in the market are eaten up by the supermarkets, because they are the only outlets marketing the product. ‘Maldivian fishermen saving the world’ does not fetch a premium, because as much as they talk about it, the world is not prepared to pay for eco-friendly fishing.”
Saleem contends that small rises in ocean surface temperatures due to climate change are driving fish deeper, further reducing the stocks within reach of the traditional pole and line method.
“Our method only works near the surface,” he says. “But with changes in weather and sea temperature, fish will not surface.”
“At the same time, look at the way we fish – most countries do multi-day trips, sticking with the same school of fish until it is fished out. Our fishermen fish for bait early in the morning, and then in the afternoon if they are lucky they find a school of tuna, fish it and then leave. The next day they make a wild guess as to where it has gone, and hope they get lucky.
“I also get the feeling that because of the high price we get, our fishermen are not putting in their best efforts. At Rf 25-30 (US$1.6-2) a kilogram, in the south it’s not uncommon for a fisherman to be on Rf 11,000 (US$720) a month. The mentality is: ‘I have enough for today, so I can relax. I don’t need to think about tomorrow.’”
Saleem believes the Maldives will eventually have no choice but to begin purse seining, augmenting traditional fishing know-how with technology such as aerial surveys to share with local fishermen sightings of birds circling the schools.
“The Maldives can certify pole and line fishing, while simultaneously conducting purse seining,” he says. “We need field officers to go on board and teach multi-day fishing techniques, such as using lights at night to catch squid and reef fish so that when they come back they have something to sell.”
Thailand tramples Maldives canning industry
As for Felivaru, the Maldives has to come to terms with the fact that it now competes in a global marketplace, and that maintaining such a level of industry is not economically competitive, Saleem suggests.
“If [Felivaru] is unable to compete in the global market it would be better to do something else. Do we ask why Airbus has not built a manufacturing plant in the Maldives? If [fish canning] is a matter of national pride, then so is having a nuclear plant.”
Based on an island in the north of the Maldives, Felivaru is faced with the high logistical costs of feeding and accommodating large numbers of staff, which other canneries in South Asia do not have to contend with.
“The main problem is that Felivaru is an old factory, and secondly the labour cost in the Maldives is very high compared to Sri Lanka or even Thailand,” adds the Fisheries Minister, Dr Didi.
“There is also a problem of quantity and [consistent supply]. If they are running a factory they require a certain amount of fish per day, which is not economic or feasible as the pole and line method means our fishing is seasonal. Felivaru has four production lines, but I doubt they have ever used more than 1-2 lines because not enough fish is available.”
Saleem adds that the Felivaru cannery “has expanded in the north, while the fish are in the south. It would be better for them to operate in Galle in Sri Lanka where they would not have pay the extra costs such as accommodation.”
The outsourced model has been embraced by Felivaru’s competitor, Kooddoo Fisheries, which now exports pole and line tuna caught in the Maldives to the Thai Union cannery in Thailand for processing and export to UK supermarkets such as Sainbury’s and Marks & Spencer (M&S). Kooddoo also buys cheaper purse seines-caught tuna, then processes and sells it to the Maldivian market at a cheaper price point, undercutting Felivaru. The company has recently opened a shop in Male’ and launched a marketing blitz.
“In Male’ we can buy fish caught one-by-one in an eco-friendly manner for Rf 18-19 (US$1.2). We can also buy an imported can of the same fish caught with purse seines for Rf 11 (US$0.70),” says Saleem.
“Instead we should eat the Rf 11 tin and export the Rf 19 tin to increase the amount of foreign currency available. The Maldives, Japan and India are not bothered about pole and line – it is only fashionable in Europe.”
Felivaru’s Solah complains that this approach forces the cannery to compete for the dwindling supply of fish with companies that are simply exporting the raw commodity without adding value.
“The government should be encouraging the fisheries industry to remain in the Maldives, because if the fish stay it means jobs and wealth stay in the country,” Solah argues.
“It is really sad to see the label on these cans that reads ‘Maldivian pole and line tuna’, complete with a picture of a Maldivian island, next to ‘Packed in Thailand’. Who is checking how much the Maldives supplies, compared to how many cans come out of Thailand? They can buy 1000 tons of Maldivian pole and line fish, and supply 2000 tons of Maldivian ‘pole and line fish’ to UK supermarkets. There is no regulatory board monitoring them.”
Saleem argues that Felivaru “cannot expect fish to be sold to it at a subsidised rate. Kooddoo is exporting because the price is better. The companies would not export if Felivaru was prepared to pay world market rates – they just wouldn’t, because of the increased cost of shipping.”
Solah concedes that the Thai Union cannery can afford to pay more for unprocessed fish, even including transport costs, because of the operation’s economies of scale, cheaper labour and lower overheads.
“People are willing to pay more for a premium pole and line product, but currently there is no disincentive to export unprocessed fish,” he says. “Government policy should be to add value while the fish is in the country, and to make sure there is enough fish available to run the factories inside the country at full capacity before exporting it.”
Maldives pole and line tuna, packed in Thailand
Sustainability sells, says Sainsbury’s
Minivan News contacted Sainsbury’s supermarket in the UK, which sells the Thai-processed product marketed as Maldivian pole and line tuna.
“The pole and line method is recognised as the most responsible fishing method for catching tuna mainly as a result of minimising bycatch in the fishery,” explained Sainsbury’s Aquaculture and Fisheries Manager, Ally Dingwall.
Media coverage around the issue of sustainability in fisheries meant it was “increasing in the public consciousness in the UK,” she said.
“The Maldives is associated with a pristine environment and clear, clean waters which deliver great quality tuna, and this is clearly attractive to consumers.”
The supermarket regularly audited its supply chain and was able to trace its products to the capture vessel via the batch code, she said.
“Sainsbury’s have had tuna products packed in the Maldives in the past but encountered logistical difficulties in supply. We are reviewing the situation at present with a view to recommencing an element of our supply from Maldivian canneries,” Dingwall explained. “Our suppliers of products such as sandwiches and sushi which contain tuna as an ingredient are already sourcing pouched, pole and line caught tuna from Maldivian processing establishments.”
Yet while the Maldivian fishing industry grapples with the pressures of climate change, globalisation and appeasing Big Grocery, the ring of foreign purse seines sieging the country’s EEZ are, according to the IOTC, scooping up tuna to the tune of US$2-3 billion a year.
“By catching fish one by one we are using a bucket to scoop from the well, while the rest of the world is pumping,” says Saleem. “It is going to finish – and we will not have got our share of the catch.”
On this, Solah agrees.
“If the Indian Ocean fisheries collapse, the European, Japanese, Chinese and Iranian vessels can go to other oceans. But what can we do? This is the only industry we know. We have to negotiate and beg other countries to please stop, because this is killing us.”
The Dhivehi Qaumee Party (DQP) has said claimed that Rf100 million (US$6.42 million) included in the government’s budget for the year 2011 for diesel subsidies for fishermen has not been given.
‘’It is a great concern for the fishermen and their families that they don’t have a penny left to take home after working the whole day,’’ said DQP in a statement yesterday.
The party accused the government of failing to develop the fisheries industry for the last two years.=
‘’We call on the government to give out these subsidies immediately,’’ said the DQP, threatening to file a suit for fishermen’s rights if the government failed to deliver the subsidies in 21 days.
Mohamed Zuhair, Press Secretary for the President, told Minivan News that the DQP was not working for the rights of fishermen.
‘’They are politicising the issue for political gain,’’ Zuhair said. ‘’The government has been working on delivering the subsidies program for fishermen and I think it will commence very soon.’’
He said that the government had been trying to establish criteria for the program and would launch it soon.
‘’It is not as easy as just going up to the boat captain and handing over the money. It has to administered,’’ he added.
The Finance Ministry has begun distributing Rf4 ($311,000) million in subsidies to private media organisations allocated by Parliament’s finance committee following its review of the 2010 state budget.
VTV, owned by businessman Gasim Ibrahim, received the highest amount (Rf1,060,000), followed by DhiTV (Rf820,000) and DhiFM (Rf434,000).
Other recipients were Radio Atoll (Rf 294,000), Faraway FM (Rf 252,000), Haveeru Daily (Rf 246,000), Aafathis (Rf 162,000), FutureTV (Rf 120,000), Miadhu Daily (Rf 102,000), Haama Daily (Rf 90,000), and HFM (Rf56,000).
The Dhivehi Rayyithunge Party (DRP) has announced it will continue its ‘red notice’ protests, despite welcoming changes the government’s new subsidies for electricity charges.
National Social Protection Agency (NSPA) today said that it changed the per unit rate for subsidies for electricity charges, a move intended to people who cannot afford the electricity bill.
According to the changes, charges for 0-100 meter units would be Rf1.50, 101-200 meter units Rf1.70, 201-300 meter units Rf2.15 and 301-400 units Rf2.50, for people receiving subsidies.
Charges for those not identified as eligible for a subsidy will remain at Rf2.25 for 0-100 units, Rf2.50 for 101-300 units, Rf 2.95 for 301-500 units, Rf3.55 for 501-600 units and Rf3.85 above 601.
NSPA Chairperson Ibrahim Waheed said that the subsidied charges were cheaper than 2008 prices.
”No changes were brought to the [normal] charges, but the subsidised rates have changed,” he said.
No changes were made to unsubsidised electricity charges because the government wished to run the State Electric Company (STELCO) without a loss, he said.
He said that the changes in the subsidised rates had no connection with the DRP-led protests.
DRP MP Ahmed Mahloof meanwhile said the protest would begin tonight at 8:45pm, and would start near the tsunami monument.
”Maldivian Democratic Party MDP’s protest outside the Vice President’s house has proved us that climbing gates was not prohibited,” Mahloof said. ”We will climb the gates of Muleeage [the President’s official residence] tonight.”
Mahloof said he had information that the police has planned to use rubber bullets to disperse tonight’s gathering.
DRP MP Ahmed Nihan said that DRP welcomed the changes brought to the electricity charges, but ”will continue the protest as we have planned.”
Nihan said that 80 percent of the people ought to receive subsidies for electricity charges.
”The procedure NSPA follows is not very comprehensive,” he said, ”but we welcome the changes they brought.”
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