MIRA to collect additional MVR110 million from telecoms tax

The Maldives Inland Revenue Authority (MIRA) expects to collect an additional MVR110 million (US$7.1 million) per year from taxes on the the telecommunications sector.

MIRA announced this week that telecommunications services will be subject to Goods and Services Tax (GST) – currently at 6 percent – from May 1.

The move comes as the government continues to introduce new revenue raising measure to address the MVR3.4 billion (US$224 million) shortfall in this year’s record MVR17.95 billion budget.

On Monday (April 14), the People’s Majlis is set to consider amendments to the Import-Export Act which propose raising custom duties on a number of items from the current zero rate to five, 10, and 15 percent or higher.

The items include diesel, sugar, sweets, cotton, rope, carpets, textiles, fur, man-made filaments, ready-made garments, and steel.

This week has also seen MIRA release its March revenue figures, which show an increase of 22 percent compared with the same month last year.

March’s figures were distorted, however, after after February’s GST payment date was extended into March as the deadline fell during a holiday.

The figures show that 54.8 percent of revenue came from GST, which includes Tourism Goods and Services Tax (T-GST) – scheduled to rise from the current 8 to 12 percent in November this year.

Last month’s figures showed a marked improvement on the previous month’s collections after the Majlis’ failure to renew the tourism bed tax in December had resulted in reduced earnings during January (reflected in February’s collections).

After the Finance Minister Abdulla Jihad warned that this loss of income could amount to US$6million month, the decision was made to reintroduce the bed tax – charged at a flat rate of $8 per bed night – until November this year.

Bed tax amounted to over US$4.5 million in March, or 7.1 percent of MIRA’s collected revenue which came to MVR938.2 million. Over 75 percent of March’s income was received in US dollars.

The authority’s figures for 2013 showed an income of MVR8.7 billion – of which 60 percent was denominated in dollars.

Despite this foreign currency income, however, dependence on imported goods results in a persistent dollar shortage, with just 2.7 months worth of reserves remaining at the end of February.

Proposals to increase government revenue were debated during February’s emergency Majlis sessions which also resulted in the requirement that resort lease extensions be paid within 2 years.

Additionally, the government has suggested that the Airport Service Charge, which has seen MIRA collect US$7.9million from foreigners leaving the country this year, be increased by 38 percent.

A World Bank report at the end of 2013 urged the government to reduce spending in order reduce the “unsustainable” public debt which currently stands at 81 percent of GDP, and could rise to 96 percent by 2015.

“Maldives is spending beyond its means and financing the budget risks affecting the real economy,” the report said.

Meanwhile, the outgoing governor of the MMA in December called for the state to reduce expenditure and to cease from printing money.


Cabinet approves implementation of SIM card user policy

The Maldives government yesterday (April 9) announced it will be initiating a SIM card user policy for all mobile phone services provided by Maldivian telecommunication companies.

According to the President’s Office website, cabinet had approved the implementation of the policy in order to tackle national security concerns over the “frequent misuse” of unregistered SIM cards in the country.

All SIM cards provided by Maldives-based telecommunications groups will now need to be registered following the cabinet’s decision to approve the user policy first presented in a paper from the Ministry of Transport and Communication.

Defence Minister Mohamed Nazim, who also serves as Acting Minister of Transport and Communication, was not responding to calls this morning.

Minivan News was meanwhile awaiting a response from the Communication Authority of Maldives at time of press about the SIM card user policy.


Bahrain Telecommunications Company acquires majority share in Dhiraagu

Bahrain Telecomunications Company (Batelco) has acquired the majority share of Dhivehi Raajjeyge Gulhun Public Limited (Dhiraagu), the largest telecommunications service provider in the Maldives, Dhiraagu announced Wednesday (April 3).

Previously, Cable & Wireless Communications (CWC), a British multinational telecommunications company, was the majority shareholder of Dhiraagu. Batelco purchased a majority of assets in Monaco & Islands Business Unit from CWC, resulting in its owning 52 percent of Dhiraagu shares.

Dhiraagu’s board of directors was altered following the purchase. The company’s leadership now includes Ibrahim Athif Shakoor as Chairperson and Government Director, and Ismail Waheed as CEO and Managing Director.


Increase in Chinese presence in Maldives IT sector sparks Indian concern

Indian authorities have expressed concern over China’s expanding influence in the IT and telecom sectors in the Maldives, Indian media has reported.

The Indian Ministry of Communications and IT, along with security agencies in India, have now agreed that Beijing’s state-owned companies should be “kept at bay” from Maldives’ IT and telecom sectors, The Hindu reported.

Indian intelligence agencies were alerted to the issue after the Maldives requested a soft loan of US$54 million for an IT infrastructure project from China

The Ministry has suggested the Indian government plan a substantial investment in the Maldives along similar projects to ensure telecom traffic between India and Maldives is handled through equipment the Indian government has confidence in.

“The Government… may also plan substantial investment in the Maldives on similar projects [as being planned by China] ensuring that the traffic between India and the Maldives is handled through the equipment installed and commissioned in the Maldives by India,” read internal government note, according to Indian newspaper the Hindu.

The Sri Lankan subsidiary of Chinese telecom equipment-maker Huawei Technologies has already signed an agreement with Maldives’ National Centre of Information Technologies to develop IT infrastructure under the ‘Smart Maldives Project’, Indian media stated.

“The proposed project assumes significance due to the fact that China can capitalise its influence over the Maldives to utilise the latter’s network once the project is implemented,” the Indian Reasearch & Analysis Wing said in an internal note as reported by the Hindu.

Minivan News was awaiting a response from Indian Minister for Communications & Information Technology Shri Kapil Sibal and Indian External Affairs Minister Salman Khurshid at time of press.

Former Transport and Communications Minister Dr Ahmed Shamheed claimed the issue of Chinese involvement in the Maldivian IT sector had been raised by Indian officials in the past.

Shamheed said that a ‘smart card’ project that had been signed between China and Nasheed’s government to replace the National ID cards had sparked interest from the Indian government.

“The Indian High Commissioner in the Maldives once suggested to me that [the Chinese] would steal all of our government’s data should we work with them.

“The deal with the Chinese was that they would provide us with smart cards which will replace our current ID cards. When this happened, the Indian government wanted to provide us with their own system instead of the Chinese one,” Shamheed told Minivan News.

Acting Minister of Transport and Communications Mohamed Nazim was not responding to calls at time of press.

Defence Minister visits China

Last month (December 10, 2012) Minister of Defence and National Security Mohamed Nazim departed to China on an official five-day visit at the invitation of the Chinese Minister of National Defence.

The move fuelled speculation in the Indian media of a Chinese role in the government’s decision to void the agreement and evict the GMR-led consortium that took place two days prior to the visit in December.

“Looking at the political situation and political framework in Maldives, I can’t rule out anything,” GMR Airports chief financial officer (CFO) Sidharth Kapur told journalists in New Delhi in December.

Following official talks between the defence ministers, Chinese state-run Xinhua news agency reported in December that Nazim assured Chinese Minister of National Defence General Liang Guanglie that the Maldives was “willing to cement relations between the two countries and their militaries.”

Chinese companies discuss Maldives’ satellite slot

Former Minister of Communication Dr Ahmed Shamheed told Minivan News in December 2012 that Defence Minister Nazim had met with two Chinese companies interested in operating a satellite designated for the Maldives.

Under the International Telecommunication Union (ITU), the Maldives could be entitled to an “orbital slot” for a satellite.

Because the Maldives’ lacks the capabilities to launch and operate a satellite, the state would have to lease it out to an external party, Shamheed said.

According to Shamheed, Defence Minister Mohamed Nazim had already been approached by various Chinese companies who have expressed interest in the satellite venture.

“At first, I had been involved in casual meetings with these companies, but now it seems to getting more serious. Nazim had even questioned as to why we have not yet signed an agreement with them,” Shamheed alleged.


Dhiraagu shares to sell on Maldives stock exchange

Local telecommunications provider Dhiraagu will sell shares to the public via the Maldives Stock Exchange (MSE) starting next Thursday.

Government shares have meanwhile been sold to all applicants.

Of its 11.4 million shares, Dhiraagu has sold 41 percent under the Initial Public Offering (IPO) at a rate of Rf80 (US$5.2). The IPO became effective on December 25, 2011.

The government lately released 48 percent of its shares, which had a value of approximately Rf376 million (US$24 million). Of those shares, 15 percent were set to be sold and 4.7 million have been sold, reports Haveeru.

Most government shares were purchased by the Pension Administration Office, the State Trading Organisation (STO) and Allied Insurance.

Foreign investors may also purchase Dhiraagu shares.