Former President and Chairperson of the opposition Maldivian Democratic Party (MDP), Mohamed Nasheed, has warned that a government mandate requiring resorts to convert 40 percent of their foreign currency earnings into Maldivian Rufiyaa could lead to the bankruptcy of the tourism industry and mass layoffs.
In a post on X, Nasheed said that the 40 percent conversion requirement poses a major risk of bankrupting resorts, leading to job losses and the collapse of other businesses connected to the tourism sector.
"Forcing businesses to convert 40 percent of their foreign currency earnings into Maldivian Rufiyaa will make these operations financially unviable and lead to bankruptcy. When the business owner goes bankrupt, people will lose their jobs. Every other business linked to the resort industry will be affected. This government is leading the Maldives toward bankruptcy," Nasheed said.
Nasheed had previously cautioned that the mandatory conversion of 40 percent of resort revenue would erode investor confidence.
"Most resorts operating in the Maldives service their loans in US Dollars. Furthermore, many resorts are foreign investments developed through loans from international banks. Foreign investors bring capital to the Maldives because they expect a reasonable return. If this changes, it will not only damage investor confidence but also jeopardize the future of the tourism industry," Nasheed stated in a previous MDP release.
The mandate to convert 40 percent of resort revenue comes at a time when the Maldivian Rufiyaa has depreciated, with the US Dollar reaching MVR 23 on the black market. The government has alleged that the black market for dollars is controlled by the resorts.
In measures announced last week, the government warned of strict action against businesses, including resorts and individuals, involved in black market dollar trading. Home Minister Ali Ihusaan characterized those involved in unauthorized dollar exchange as being complicit in money laundering.
