The current government offered lagoons for foreign investors to develop private islands in violation of the tourism law at the Invest Maldives Forum held in Dubai on February 13, Adhadhu has learned.
The Invest Maldives Forum is intended to provide information about investment opportunities in the Maldives to foreign investors. The first forum took place during President Dr. Mohamed Muizzu’s state visit to China.
The forum in Dubai was the second event. According to the Economic Development Ministry, representatives from companies active in sectors such as ports, logistics, renewable energy, real estate, tourism and urban development attended the forum.
Adhadhu has obtained a leaflet distributed at the forum about investment opportunities in tourism with information about leasing islands through a cross-subsidy arrangement. According to the leaflet, the cross-subsidy model is a framework for investors to directly approach the government to lease islands and lagoons for tourism development.
Under the model introduced by the previous government, funds invested in the lagoon or island would be used for government projects. Instead of making payments, after the project is completed, a preferred lagoon or island would be provided based on the cost of the project.
At the Invest Maldives Forum, the government noted different tourism products in the Maldives open for such investments, including integrated resorts, long-term leases of strata villas, and private islands.
Private island was also a concept introduced by the previous government through amendments to the tourism law as part of efforts to diversify the tourism industry.
According to the tourism law and regulations enacted under the law for developing and leasing private islands, such islands could only be created by land reclamation in lagoons. The development of private islands through reclamation could only be awarded to 100 percent government-owned companies.
Section on private islands in leaflet distributed at the Dubai forum.
The lagoon could be awarded to a government company by a presidential decree. Moreover, the government must hold all shares of the company during the lagoon’s lease period. However, the information brochure distributed at the Dubai forum stated that foreign investors could propose the development of private islands.
“Investors are open to approach the government with their interest to acquire lease of private islands or lagoon spaces to develop private islands,” read the information written in English.
This was a proposal made by the government in clear violation of the tourism law. According to the law, leaseholder rights of lagoons with private islands could only be transferred to 100 percent government-owned companies as well.
The decision to only allow 100 percent government-owned companies to develop private islands was made to ensure that the state treasury benefits from the venture, said an official who had been involved in the legal changes made by the previous government.
“When such places are developed and leased through 100 percent government-owned companies, their profits will go to the state treasury. This was an effort made to reduce the state’s debt, increase revenue and increase the capital needed for further investments,” the official said.
The Economic Ministry, which organized the investment forum, could not be reached for comment on the attempt to lease lagoons against the tourism law as the ministry’s officials do not provide information to Adhadhu.
