Maldives has relaxed regulations on registering a foreign investment in the island nation’s lucrative tourism sector.

Previous regulations required a foreigner interested in owning or operating any type of tourist facility to show evidence of a right to acquire an existing leasehold, sub-leasehold or management of a tourist property, or an equity interest in a company holding leasehold, sub-leasehold or management rights.

This meant the investor had to produce a letter from the tourism ministry, a completed sale and purchase agreement, or at least an expression of interest in the purchase of a property.

But the requirement has now been abolished.

Under new policies adopted by the economic ministry, a foreign investor can register a company without showing proof of interest in acquiring a specific tourist property.

After the registration, the investor will receive six months to acquire any tourist facility under the company.

The eocnomic ministry also has the right to extend the initial period.

This change benefits three types of investors:

• New investors looking at entering the Maldives market to acquire an interest or property in the Maldives
• Existing investors looking at registering a new company to acquire a different property either independent of the existing property or current partners
• Existing investors who wish to diversify into other interests within the same space, sector or industry

Over the past few years, dozens of uninhabited islands have been leased to local and foreign resort developers. Several international brands have entered into the market, increasing the number of resorts to more than 150. That number is set to increase as another 20 resorts are expected to open over the next two years.

Along with the new resort openings come the challenge of increasing demand from budget travellers who choose guesthouses over luxury resorts that the Maldives is known for. The guesthouse sector has rapidly expanded with over 500 guesthouses in operation today.

Tourism has been the bedrock of the Maldives’ economic success. The $5 billion-dollar economy grew by 6.7 per cent in 2018 with tourism generating 60 per cent of foreign income.

However, the coronavirus outbreak has hit the Maldivian economy hard, as travel restrictions and other preventive measures affect the country’s lucrative tourism industry, which contributes the bulk of the island nation’s state revenue and foreign reserves.

The government is at present projecting a possible 13 per cent economic contraction this year — an estimated $778 million hit.