Joint venture company registered to develop Fushidhiggaru

A joint venture company (JVC) formed between the government and Prime Capital Maldives Pvt Ltd to develop a special tourist zone in the Kaafu Fushidhiggaru lagoon has been registered by the economic development ministry in accordance with a Civil Court judgment, reports newspaper Haveeru.

Registrar of Companies Mariyam Visam told the local daily today that the ministry registered the JVC within the seven-day period stipulated by the Civil Court verdict, which also ordered the government to sign a master lease agreement within five days of registration, “and [to] make all arrangements undertaken by the government in accordance with the agreement”.

In September 2013, Prime Capital sued the government after the ministry refused to register the JSC citing lack of authorisation from then-President Dr Mohamed Waheed as required by law.

The agreement was signed between Prime Capital and the Maldivian government on January 18, 2013 to lease the Fushidhiggaru lagoon for a 50-year period to a JVC with a 25 percent stake for the government.

According to local media, the government was to receive 30 percent of the profits from the tourism venture in the lagoon south of the capital Malé.

Prime Capital is reported to be a Singaporean company.

Following media reports last year suggesting that the JVC agreement was signed secretively, both Finance Minister Abdulla Jihad and Tourism Minister Ahmed Adeeb initially denied the existence of an agreement to lease the lagoon.

Less than two weeks before the first round of last year’s presidential election on September 7, Jumhooree Coalition campaigner Umar Naseer – now home minister – leaked documents to the media purported to be an agreement to sell the lagoon.

Naseer alleged at the time that the economic development ministry stopped the project as the cabinet had not officially approved it.

Moreover, the agreement was signed without seeking legal advice from the attorney general, he claimed.

Adeeb denied the existence of an “official” lease agreement and dismissed the allegations as a “political assassination” attempt in the days preceding the presidential election.

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Cabinet’s convention centre re-zoning “for political gain”: Addu City Mayor

The Cabinet has advised President Mohamed Waheed Hassan to overturn the previous government’s decision to make the Addu Equatorial Convention Center (ECC) zone an ‘uninhabited area’, potentially allowing the sale of prohibited commodities such as liquor, as practiced for resorts.

The area was designated ‘uninhabited’ on November 19, 2011 by former president and current presidential candidate Mohamed Nasheed.

Yesterday’s recommendation originated in the Finance Ministry, which submitted a paper on the subject during Monday’s cabinet meeting, the president’s office reports.

Spokespersons at the President’s Office said they could not provide details on the recommendation; Addu City Mayor Abdullah Sodig reports that the council was not consulted on or informed of the Cabinet’s recommendation, and claims that it was made for political gain in the face of this Saturday’s presidential elections.

“The Cabinet recommendation opposes Nasheed’s [tourism development] policy, and they want to show the public that they are trying to give land to people who need it. But it’s really just political gain,” Sodig said. “Three days before elections, I don’t think it’s about giving people land.”

Zoning laws in the Maldives determine which islands and areas may be developed for tourism and therefore exempted from national laws prohibiting the sale of alcohol and pork and enforcing compliance with cultural dress codes. Maldives’ southern atolls, including Addu and nearby Gnaviyani atoll, have historically benefited the least from the country’s tourism economy.

President Nasheed decreed the ECC zone uninhabited prior to the 2011 SAARC summit in Addu, effectively laying a foundation for resort, guest house and other tourism-oriented development activities.

Nearly two years since this decree the mood has shifted dramatically. Bids to develop the convention center and surrounding area were interrupted by the February 7, 2012 transfer of power, after which the new administration retained the building as a “national asset”.

Formerly enthusiastic about Addu’s growth potential, Sodig today expressed deep frustration with the government’s inaction.

“[The Convention Center] is never dusted, the toilets are never cleaned, the floors never polished,” he said, adding that the facility has only been used for a few wedding parties and political rallies since it opened in November 2011.

Sodig claimed that his repeated requests for maintenance funds and development activity had received minimal response from President Waheed’s government.

“I took the State Minister of Housing to the building and asked him to look into maintenance. I even met with the Attorney General, Azima Shukoor, for the same purpose in Male,” said Sodig. “She said she would think about it. But until now they have done nothing.”

Sodig reports that without tourism development the ECC, which as of January was mired in MVR 4 million ($260,078) of unpaid electricity bills, “would end up as a liability”. As of June, the Maldivian government owed State Electricity Company (STELCO) MVR 543 million ($35.2) in unpaid electricity bills.

The Cabinet’s sudden action this week suggests that the ECC zone is now being treated as a pawn in the housing debate for the presidential elections. Addu Atoll is home to a significant percentage of the population, and has historically supported President Nasheed’s Maldivian Democratic Party (MDP).

In 2002, 700 ECC-zone land plots were allocated to Adouin families. According to the mayor, only 150 plots have been officially registered as ‘in use’. In an atoll where the average household income is MVR 60,000 ($3,900) per year, the approximate cost of building a two-bedroom home is MVR300,000 ($19,500).

While Adduans who received land in the ECC zone objected to President Nasheed’s zoning decree in 2011, they were content with the island council’s compensatory proposal, Sodig said. He added that he was not aware of any recent complaints that might have triggered the Cabinet to recommend zoning reversal.

The ministries of Finance and Housing had not responded to calls at time of press.

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Comment: The guesthouse enterprise

The following is a translation of an article by former President Mohamed Nasheed, written ahead of a public forum on Maafushi in South Male’ Atoll, to discuss the future of mid-market guesthouse tourism in the Maldives. It first appeared on Buzzmaldives.

What the average Maldivian wants is basic. We want a way to increase our income. We want to broaden our narrow financial horizons through development.

It is not that we lack this capacity to develop. We have plentiful natural resources. If we settle for the current economic status quo, believing that what we have now is the limit to what we are entitled to, it would mean that our true wealth potential remains untapped.

What the Maldivian Democratic Party and I have always pointed out is this basic fact: we want to develop. To upgrade beyond the current status quo. The ordinary Maldivian’s complaint is that of poverty, of financial anxiety. We want a wallet with the wads; we want to realise that financial progress is possible.

The political office is a place that should offer solutions to these complaints. This is its responsibility and obligation.

The most profitable industry in the Maldives is tourism. The country has ample natural resources that favour this. Maldivians have long since demonstrated the capacity, the insight and aptitude to manage this industry. In the last 40 years, Maldivian tourism has ballooned into a billion-dollar industry.

In those four decades, we have sold two types of tourism-related services: resort facilities and live-aboard facilities. According to industry experts, these two particular trades rake up [annual] invoices of up to three billion US dollars.

What we advocate through the MDP is that Maldivians deserve far more than this three billion. We could incorporate another facet in the tourist industry, one that would benefit a larger proportion of Maldivians: the venture towards guesthouses.

‘Guesthouses’, in this context means providing vacation facilities to tourists in the Maldivian inhabited islands. The main factors that entice tourists to our isles are its climate and its natural exquisiteness. And it is not just the desert islands that possess these qualities. The entire country is blessed with the same beauty and climate. Providing guesthouse services to tourists from inhabited islands would be no less profitable than resort islands, because the capital costs are lower for the former. While it costs about US$300,000 to create a bed in a resort, we claim it would not cost even US$10,000 per bed in a guesthouse business.

Until the MDP government came to power in 2008, Maldivians weren’t permitted to operate guesthouses on inhabited islands. It was mentioned in the amendments that were brought to the Tourism Act in January that year, but, without the regulations for the actual implementation under the Act in place, the avenues for implementing these businesses remained closed. Under MDP advocation, attempts were made to provide this choice for guesthouse businesses.

During the 16th People’s Majilis, in July 2008, the member for Male’, MP Mohamed Shihab, submitted a resolution to allow guesthouse services in inhabited islands. The resolution was passed with a Majilis majority. Again, due to there being no regulations, the avenues still remained shut.

During the rule of ‘the beloved leader’ Maumoon Abdul Gayoom, of the Progressive Party of the Maldives (PPM), it was not the government alone who vocalised against guesthouses in inhabited islands. It was the resort owners as well. The sentiment behind this insinuated that such a trade would be detrimental to the culture, lifestyle and the religious values of Maldivians. The religious Adhaalath Party’s founding further cemented this line of reasoning.

To this day, PPM, Adhaalath, and resort-owner Gasim Ibrahim’s Jumhoree Party continue their palaver against guesthouse businesses along the same lines.

Maldivians wish for progress. They do not wish to be bogged down in antiquity. If our lifestyles and traditions can only be vivified by keeping the country in this century-old mold, the development that we yearn for would be impossible.

Having tourists on inhabited islands is not going to result in the community facing any additional detrimental effects that do not already exist. On the contrary, having tourists will empower the islanders to overcome whatever objectionable issues that they may face. Maldivians will have to open their eyes to outside cultures, and allow for the increase in opportunities for development. In addition to direct employment and income generated by guesthouses, it will also boost other existing island businesses.

The demand for agriculture and fishing will increase as will the demand for island cafes and restaurants. It will pave the way for laundry services, and bakeries. The transport system will improve. Carpentry and woodwork services will progress. There will be an impetus for the general businesses on the islands.

For a larger proportion of Maldivians to benefit from the tourist industry, a set-up must be established that involves as many Maldivians in the tourist industry as possible. Building a resort is a costly affair. To obtain the hefty capital to develop a resort is a task that is next to impossible for those of us who are not big businessmen. Up to today, there are only about 50 people who directly profit from Maldivian resorts.

According to guesthouse operators, the cost for setting one up is less than what is needed for building a large dhoni. It only takes about two to three million rufiya to construct a four to five bedroom house. A great number of businessmen in inhabited islands are capable of providing this level of investment.

This much is evident from the boats, and the large mansions they have built. Along with them, there are so many people, in Male’ itself, who are capable of investing two to four million rufiya in small businesses.

Permission to operate guesthouses in inhabited islands for the Maldives was only granted as 2009 was ending. In 2010, there were 479 beds in 23 guesthouses. In 2010, 2011 and 2012, guesthouses increased at the rate of two to three guesthouses every month. Currently, there are 1117 beds in 76 guesthouses. The amount of Maldives operating guesthouses is increasing at a fairly rapid rate. Already the proportion of guesthouse operators is catching up to that of resort owners. In three years, there can be more than two thousand guesthouses in the Maldives increasing the amount of tourists coming into the Maldives twofold.

The tourists who come to guesthouses in the Maldives are slightly lower-end travellers, those whose daily budgets hover around the US$100 mark. The guesthouses in the Maldives are priced in similar manner, their rates usually not exceeding US$100. According to related research, there is a large market for this particular range of tourists, around the region in India, as well as in Europe and China.

Consider Maafushi in Male’ Atoll. There are currently 118 beds in 16 guesthouses. According to guesthouse owners, the occupancy rate at these guesthouses have maintained itself at over 70 percent.

Consider Maafushee Dhon Manik. A man I’ve known since childhood (since deceased) leaving behind five children. One of his children opened his first guesthouse in 2010. Since then, he has opened one every year. It has to be said now, that one of Maafushee Dhon Manik’s children is a DRP councilor, which warrants pointing out to refute the claim that these opportunities are available to only MDP members.

A large part of my deceased friend’s life was spent working at resorts, working as a foreman before he got sick. Dhon Manik and his children all understand the business of tourism. Now they are guesthouse owners. There are so many Dhon Maniks in the Maldives. And so many of his sons.

MDP’s forecast is to increase, twofold, the amount of tourists coming to the Maldives, by offering loans and training opportunities for potential business operators, combined with government aided marketing of this particular kind of tourism.

There are currently 22,889 tourist beds in operation in the Maldives. Considering the high costs for resort capital, to increase the amount of beds by 25,000 will take a lot of time. Even now there are more than 100 islands leased for resort development. It is difficult to estimate how long it will take for them to begin operating services. At the most, tourist resorts increase at only at the rate of two or three resorts annually.

To increase guesthouse beds to 25,000 will cost a maximum of US$250 million. If we are to spread this over five years, this is an amount the government could certainly guarantee. In order to develop the guesthouse industry, the basic facilities in inhabited islands should also be improved, such as water, sewerage and electricity. Likewise, health and waste disposal facilities. Roads and transport facilities. Airports, harbours and ferry terminals. Especially, developing skills and education.

The 2009 National development plan was compiled in a manner that paves the way for the guesthouse industry. God willing, in 2013, during my new term in office, the amount of tourist beds in the Maldives will increase twofold. Productivity will increase, along with the income for the citizen and the state. Financial horizons will broaden. The Maldivian island will develop. We will reach the destination of ‘the other Maldives’.

Mohamed Nasheed is the former President of the Maldives and the Maldivian Democratic Party (MDP) presidential candidate in the 2013 elections.

All comment pieces are the sole view of the author and do not reflect the editorial policy of Minivan News. If you would like to write an opinion piece, please send proposals to [email protected]

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