A fee charged by the government for the sale or transfer of leaseholder rights of resorts under development has been slashed from US$100,000 to US$10,000 in the hopes of restarting stalled projects, Tourism Minister Dr Abdulla Mausoom told parliament on Monday (4 April).
The lease transfer fee for operational resorts was also reduced to US$50,000 through amendments made to 2010 regulations last week. If there is more than one natural or manmade island in the same lagoon, the changes also allow the leaseholder to either sublease individual islands or sign separate management agreements.
“So this is a very big relief for parties that have held islands and been unable to develop them, they will have the opportunity to hand them over to other parties and it will be an ease for investors,” said Dr Mausoom.
Addressing concerns expressed by lawmakers, the minister revealed that construction work has completely stopped on 83 islands leased for resort development. A new three-year deadline was imposed when lease agreements were recently revised for 75 islands. Agreements will be automatically terminated if the resort is not opened in three years. The period is five years if the development involves land reclamation.
“I think investors should consider now, what will happen from today to tomorrow to the value of an island kept in hand? Make a decision today,” he appealed, adding that investors should not assume that they could sell an island for up to US$5 million. He urged owners to transfer their leases to other investors.
The leaseholder must pay rent after the end of the construction period stipulated in the agreement even if the resort is not built on time, the tourism minister noted. The government has extended construction periods upon request and deferred rent until the resort is opened, he said.
The main reason for the stalled projects is the lack of funding, Dr Mausoom conceded. Whilst foreign investors secure financing from overseas banks, an “internal mechanism” needs to be established to facilitate credit for local investors.
Other takeaways from the minister’s question and answer session:
- 13 parties submitted 18 proposals for nine islands put up for bidding last year.
- No interest in nine other islands offered for lease, which suggests that acquisition costs need to be reviewed.
- Evaluation of bids expected to be complete by the end of April.
- 14 new resorts to open in 2022.
- 10,000 new employees needed annually for the tourism industry. But the local job market has a maximum of 4,000 school leavers a year, which means 6,000 foreign workers will be needed.
- The government is working on human resource development projects to train Maldivians for higher-ranking or management positions.
- Tourist arrivals from Russia – formerly the top market this year – have declined by 70% since the start of the war in Ukraine.
- Arrivals from Ukraine – also a top ten market – have “almost completely disappeared”.
- Marketing efforts are focusing on existing top markets such as India.
- Planning underway to develop a resort in Kaafu Atoll Kaashidhoo, either on a separate island to be reclaimed in the lagoon or on the inhabited island as an integrated resort.