Tag: tax incentives

Parties reach agreement for committee to resume review of SEZ bill

Political parties in parliament have reached an agreement for the economic affairs committee to resume its review of the governments flagship special economic zone (SEZ) legislation after the Jumhooree Party (JP) and Maldivian Democratic Party (MDP) boycotted proceedings last week.

At a meeting held last night to resolve the impasse, JP Leader Gasim Ibrahim reportedly assured cooperation for continuing the review process, explaining that he had walked out in protest of the committee chair refusing to incorporate recommendations from state institutions.

The business tycoon said he boycotted Wednesday’s (August 13) meeting after his suggestions to address “one or two issues” in the bill were ignored.

Representing the main opposition party, MDP MP Mohamed Aslam insisted that the party’s concerns should also be addressed.

If not, Aslam said, the party would “take to the streets” in protest. On Thursday (August 14), the MDP announced protests against passing the bill in its current form, warning of “dangerous” consequences.

After walking out of Wednesday’s meeting, Gasim had also warned last week 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.”

Further meetings of the committee – where the ruling Progressive Party of Maldives (PPM) and ally Maldives Development Alliance (MDA) have a voting majority – had been cancelled following the boycott.

At last night’s meeting, PPM MP Ahmed Ameeth proposed holding a meeting today to approve a timetable to conduct the review process. While MDP MPs voted against it, the proposal was passed with the JP MPs’ support.

Subsequently, at the meeting this morning, the committee passed a motion proposed by Ameeth to give authority to the committee’s chair – PPM MP Abdulla Khaleel – to hold meetings every day of the week except Friday to fast-track review of bills.

The motion was passed with five votes in favour. While JP MPs Gasim Ibrahim and Abdulla Riyaz voted against the motion, MDP MPs on the committee did not attend today’s meeting.

Khaleel has previously declared his intention to complete the review process and send the bill to the Majlis floor for a vote before the end of August. Parliament breaks for a one-month recess at the end of the month.

Parliamentary oversight

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

Speaking at a rally Thursday night, MP Eva Abdulla objected to the absence of parliamentary oversight in the draft legislation, noting that a 17-member investment board appointed by the president would have the authority to create SEZs.

While the president’s nominees to independent institutions required parliamentary approval, Eva noted that parliament would not have a similar confirmation role for endorsing members to the board.

As investors would not have to pay import duties or taxes for a 10-year period, Eva contended that the public would not benefit from the SEZs.

Investors would also be able to bring in foreign workers under relaxed regulations while companies with foreign shareholders would be able to purchase land without paying privatisation fees or sales tax.

In other countries, Eva said, such incentives were offered to investors in exchange for creating job opportunities for locals.

At a rally in Addu City on Friday night (August 15), MDP MP Rozaina Adam urged the public to consider why President Abdulla Yameen did not wish for parliament to exercise any oversight despite the PPM’s comfortable majority in the People’s Majlis.

The MP For Addu Meedhoo suggested that the president did not want his own party’s MPs to be aware of the “illegal activities” and “massive corruption” that would take place in the SEZs.

Responding to the criticism from the opposition, President Yameen told reporters prior to departing for China Thursday night that leasing islands or plots of land was the prerogative of the president or the executive.

“Parliament could make rules. That’s why we’re making a law. But after the rules are set, it is not the parliament that would designate the economic zones. Parliament is not concerned with governance,” he argued.

Parliament could amend the draft legislation to address shortcomings, Yameen added, suggesting that the president having authority to create SEZs was no cause for concern.

On the tax incentives, Yameen contended that resorts were also developed with similar tax exemptions.

“Even now, everything brought in for a new resort under development is exempt from [import] duties,” he said.

“So they have enjoyed the benefit of special economic zones without a law through the tourism law. What we’re trying to do now is to give that benefit through the special economic zone.”

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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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