Lease rent payable by resorts in Maldives for the rest of the year will be deferred for a year, the island nation’s finance ministry announced Sunday.

Detailing a plan earlier announced by President Ibrahim Mohamed Solih to grant lease rent deferrals, the ministry said lease rent payable by resorts for the third and fourth quarter of the year will be deferred until June 2021.

Those that have leased land from the government for other ventures such as agriculture will also get a similar deferral.

The deferred payments must be paid in instalments within a year.

Payments can be distributed equally and paid on a quarterly basis starting June 21, 2021. This means that instalments will be due on June 21, September 21, December 21, and March 21.

Lessees can also opt to distribute the payments equally and pay every month.

What is the lease rent?

Maldives allows tourism leases up to 99 years, with rent calculated based on the land area of the island leased.

Lease rent, also called Tourism Land Rent, has to be paid in advance for each quarter. By that requirement, tourist resorts can now get the rent payable for the third and fourth quarter of the year deferred. 

Failure to pay lease rent attracts a penalty of 0.5 per cent of the amount that is due. The penalty is levied for each day of delay, and continues to be applied until such time the lease rent amount and accrued penalties are all paid.

In recent months, the issue of lease rent has become a major contentious issue between the government and leading figures in the tourism industry, which has been hard hit by the coronavirus pandemic.

The government earlier offered to defer lease rent for the third and fourth quarter, but it was tied to a key condition that all local employees be retained for three months.

This sparked a rare criticism by the Maldives Association of Tourism Industry (MATI). The influential industry representative body said the offer came too late.

The Maldives is preparing to reopen its borders on July 15.

With the borders reopening on July 15, resorts and hotels on uninhabited islands as well as liveaboard vessels can begin hosting tourists right away.

Guesthouses and hotels located on inhabited islands will be allowed to reopen on August 1. Passengers on cruise ships and yachts will be barred from disembarking at inhabited islands until then.

Thirty-day free on-arrival visa will be issued to all tourists with a confirmed booking for a stay at any registered tourist facility in the country. The entire holiday has to be booked at a single facility except for transit arrangements.

There will be no mandatory quarantine or testing on arrival. Tourists will only have to complete a health declaration form.

But visitors with symptoms of the Covid-19 respiratory disease caused by the novel coronavirus or those travelling with someone who has similar symptoms will be tested at their expense.

The coronavirus outbreak has also 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.

Before the pandemic, the government had been bullish about tourism prospects, targeting two million, high-spending holidaymakers this year after last year’s record 1.7 million.

However, only 382,760 tourists visited the Maldives before the country closed its borders on March 27. It was a 40.8 per cent decline over the 646,092 that visited the Maldives from January to March last year.

With arrival numbers falling, several resorts across the Maldives suspended operations.

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

On March 8, Maldives reported its first cases of the novel coronavirus, as two hotel employees tested positive for Covid-19 at a luxury resort in the archipelago.

Eighteen more cases — all foreigners working or staying resorts and liveaboard vessels except five Maldivians who had returned from abroad — were later identified.

A six-case cluster of locals, detected in capital Male on April 15, confirmed community transmission of the coronavirus. Several more clusters have since been identified, bringing the total number of confirmed case in the Maldives to 2,323.

Eight deaths have been reported and 1,911 have made full recoveries.

The Maldives announced a state of public health emergency on March 12, the first such declaration under a recent public health protection law.

The public health emergency declaration allowed the government to introduce a series of unprecedented restrictive and social distancing measures, including stay-at-home orders in capital Male and its suburbs, a ban on inter-island transport and public gatherings across the country, and a nationwide closing of government offices, schools, colleges and universities.

Non-essential services and public places in the capital such as gyms, cinemas and parks were also shut.

Restaurants and cafes in the capital were asked to stop dine-in service and switch to takeaway and delivery.

A nationwide shutdown of all guesthouses, city hotels and spa facilities located on inhabited islands was also ordered.

These measures allowed authorities to contain the outbreak.

More than half of the people who contracted the virus have recovered and daily recoveries have over taken the number of new infections detected per day.

The restrictions are now being eased in phases, with the second phase lasting at least until June end.