The Tourism Ministry has formulated a new regulation allowing State-Owned Enterprises (SOEs) to acquire sites for resort development by offsetting the costs against debts owed to them by the government.
This regulation follows recent amendments to the Tourism Act, which enable the government to lease islands, land plots, and lagoons to SOEs for tourism development.
Under the new framework, the lease acquisition costs for state companies will be determined by the ministry on a case-by-case basis, deviating from standard procedures. These payments must be settled in full as a single lump sum.
While the regulation stipulates that SOEs can use outstanding government payables to cover acquisition costs, it does not specify whether these offsets apply to subsidies, capital injections, or payments for services rendered. The regulation only requires the interested company to submit a supporting document from the Finance Ministry.
SOEs are prohibited from subleasing these properties to third parties after acquisition. However, they are permitted to appoint external parties to manage the resorts under management agreements once development is complete.
The legal amendments define state companies as entities in which the government holds at least a 45 percent stake. This threshold is widely viewed as a move to facilitate joint ventures between SOEs and the private sector for resort development.
The tourism regulation further mandates that the government’s 45 percent shareholding in such companies must not be diluted for the duration of the lease agreement.
The push for SOEs to enter the resort development sector follows a history of unsuccessful attempts by previous administrations. Companies such as STO and Island Aviation have previously sought to enter the industry, citing a need to ease their foreign currency requirements.
Similarly, the Maldives Tourism Development Corporation (MTDC), a public company established to develop resorts, has failed to fully develop a single property in its 20-year history. The only operational resorts under its portfolio are those where development rights were subleased to foreign companies.
