Business
Foreign tourism investments to register?
“No foreign investor may carry out any tourism related activity in the Maldives except after signing a foreign investment agreement and registering that investment with the Ministry of Tourism.”
Sounds like a major policy shift?
It is neither a new policy initiative nor a recent change in law.
The law
The policy statement is captured eloquently in section 39 of the Maldives Tourism Act. The section has been part of the Tourism Act since the law was first enacted some 21 years ago. Despite the fact that the Tourism Act has undergone amendments at least nine times since its introduction on May 16, 1999, section 39 has survived unaltered, unchanged.
Section 39 of the Maldives Tourism Act says this:
No foreign investor may carry out any tourism related activity in the Maldives except after signing a foreign investment agreement as mentioned in the Foreign Investment Act and registering that investment with the Ministry of Tourism as a foreign investment as provided in the Foreign Investment Act.
As is evident from the language of the section, the position crystallised in the form of section 39 of the Tourism Act is closely related to and deeply rooted in the Maldives Foreign Investment Act – a piece of law that has been in existence for some 41 years already, again unaltered, unaffected.
Section 1 (b) of the Foreign Investment Act that was introduced on May 1, 1979 says that no foreign investment can be carried out in the Maldives except after registering that investment and signing an agreement with the Ministry of Tourism (if the investment is in tourism) and with Ministry of Trade Industries and Labour (if the investment is in any other industry). Ministry of Trade is now succeeded by the Ministry of Economic Development.
Further, section three of the Foreign Investment Act reiterates that every investor in the tourism industry shall sign an agreement with the Ministry of Tourism if that activity relates to tourism, and with the Ministry of Trade Industries and Labor if the business relates to any other industry.
The unpacking
Let’s unpack section 39 of the Tourism Act and understand its components.
Firstly, the section applies to all foreign investments in the Maldives tourism sector. This may mean that it goes beyond the acquisition or leasehold ownership of a resort property. It extends to all verticals of the industry which are open for foreign direct investment.
Secondly, permissibility is dependent on to two events: signing a foreign investment agreement; and registration of the investment as a foreign investment.
The execution of the foreign investment agreement and registration of the investment are both considered as “entry requirements” for a foreign investor. Once a foreign investor travels through these two processes and completes its entry in to the Maldives, it gets to operate at a level field with a local investor in the same space. All other regulatory requirements of the industry are applicable to local and foreign investors alike – for example – the signing of an island lease agreement for lease of a resort property.
This striking legal requirement flows from the Foreign Investment Act which asks tourism sector foreign investors to register their investments with the Ministry of Tourism and investors in the non-tourism sectors to register their investments with Ministry of Economic Development; and irrespective of their chosen industry, to sign foreign investment agreements with the respective ministries.
The breach
Section 39 embodies a classic case of a piece of law that is “more honoured in breach than in the observance.”
While over time foreign investment approvals and signing foreign investment agreements have become synonymous with the Ministry of Economic Development, the requirement of law is in reality equally applicable to foreign investors in tourism and non-tourism sectors alike – as the legal requirement emanates from the same source – the country’s foreign investment law.
However, to our knowledge, there has never been an occasion where this legal requirement has ever been complied with so far as it relates to the tourism industry.
There is nothing in the body of legal rules, guidelines, or administrative bureaucracy of the Ministry of Tourism that dictates a foreign investor to complete a separate process of signing a foreign investment agreement or complete a registration process for its investment with reference to section 39 of the Tourism Act or section three of the Foreign Investment Act.
Whenever this legal requirement was flagged in legal due diligence investigations in the past, the prevailing view of responsible officials had consistently been that the requirements of section 39 are duly met with the signing of the Island Lease Agreement (in place of a separate foreign investment agreement) and grant of an operating license (in place of the registration of a resort investment). As much as they carve out these two requirements, the remaining regulatory requirements on registration and licensing are religiously followed – and applied to all investors alike – local or foreign – in all verticals of the industry.
The shift
However, this position may shift soon.
Ministry of Economic Development (the body responsible among other things for the registration of entities investing or operating in tourism industry) has launched a new FDI policy on February 11, 2020.
Since the inception of this FDI policy, the Ministry of Economic Development is insisting on following the foreign investment law requirements even in case of tourism sector investments – so long as they remain law.
The relief for existing investors is that the policy will be enforced only in respect of future requests – existing investments will not be disturbed.
The conclusion
Since this legal requirement rooted in an archaic piece of law (which has only been followed in its breach) has now been revived with the introduction of the FDI policy, there is bound to be discussion and disagreement. It is likely that the ensuing discussions may stimulate relevant policy makers or interested legislators to make a decision – either to keep the requirement as it is or expunge it from the statute books of the country.
Note: This article has been reproduced with permission from its author: Nasheed & Co., a commercial law firm in the Maldives. The original article can be viewed here.
The Maldives Association of Tourism Industry (MATI) held its 34th Annual General Meeting at Kurumba Maldives today, with a total of 100 members in attendance.
The day’s events began with a welcome address from the Chairman of MATI, Mr. Mohamed Umar, who also presided over the session. The agenda included an address from the Secretary General, Mr. Ahmed Nazeer, the review and approval of the minutes of the 33rd AGM, the review and adoption of the Annual Report and Financial Reports for 2023, the approval of the 2024 budget, the appointment of auditors for 2024, the welcoming of new members and election of executive board members to the two vacant positions (by-election).
In the member discussion session, the following topics were covered: the Government’s aim to reach net-zero emissions by 2023 and renewable energy generation in the Tourism Industry, new terminal of Velana International Airport and developments, employment challenges, the Industrial Relations Act and trade unions, environmental conservation and the significance of creating and executing efficient management plans for protected areas like the South Ari Marine Protected Area (SAMPA).
Following the official proceedings, the Minister of Tourism Hon. Ibrahim Faisal and the Minister of Economic Development and Trade Hon. Mohamed Saeed joined the forum. The Ministers provided remarks and engaged in a Member Q&A session. This session provided members with the chance to directly engage with the Ministers and delve into crucial industry topics. The queries focused on the Economic Outlook, forthcoming development plans and immediate challenges and issues affecting the Tourism Industry.
A video presentation was also showcased that delved into the extensive work undertaken by MATI in 2023. The video also touched upon the Tourism Industry’s performance over the past 5 years, as well as the current and projected human resource capacity of the sector.
In his closing remarks, the Secretary General highlighted the importance of collaborative efforts in addressing industry challenges and called for greater unison amongst industry stakeholders, ending with an acknowledgement of the promising start to the year in terms of arrivals.
Executive Board Members elected to the 2 vacant positions (by-election):
- Ibrahim Shareef, CEO and Managing Director of Maldives Airports Company Limited
- Renato De Olivera, General Manager of The Ritz-Carlton Maldives, Fari Islands and representative of Marriott International
Join us for the Travel Creators Exchange 2024, taking place on February 1, 2024, at the Hotel Jen in Male’, Maldives.
This dynamic event provides a platform for networking and collaboration among Maldives-based travel creators, fostering connections, idea-sharing, and the establishment of lasting partnerships to expand opportunities and monetise content.
Our lineup of distinguished speakers includes:
- Zihuny Rasheed, Deputy Managing Director of MMPRC, will present on “Power of Digital Storytelling: Collaborative Strategies for Destination Promotion.” MMPRC actively markets the Maldives globally, utilising a comprehensive approach that includes travel trade shows, roadshows, digital marketing, and more.
- Amjad Thaufeeg, Commercial Director of Kuda Villingili Maldives Resort, brings over 23 years of hospitality industry experience. He will discuss “The Role of Content in Tourism Marketing,” drawing on expertise in revenue, customer service, sales & marketing, and human capital development.
- Suresh Dissanayake, Assistant Vice President of Sales & Marketing of Heritance Aarah & Adaaran Resorts, with nearly two decades of experience, will shed light on “What does a Sales and Marketing Director Do?” He brings extensive luxury hospitality experience and a proven track record in sales, distribution, and marketing.
- Vishal Amir Ahmed, a versatile cinematographer and content creator, will explore “Who is a Content Creator.” Currently associated with Various Arts Studio, he specialises in providing multimedia solutions to various clients.
Organised by Maldives Insider, Maldives Virtual Tour, Travel Trade Maldives, and Hotelier Maldives, this collaborative effort aims to empower Maldives-based travel content creators and elevate the Maldives as a premier destination for captivating travel storytelling.
Events
Acclaimed contemporary artist Ana Pušica explores perpetuality and community at Patina Maldives
Ana Pušica Kramer, an internationally acclaimed contemporary artist, joins Patina Maldives for an exclusive art residency in the now infamous Fari Art Atelier. From January 22 to February 22, 2024, Ana Pušica will grace the shores of the Fari Islands, weaving a vibrant narrative of colour and emotion across her larger than-life canvases.
Her artistry transcends boundaries, melding abstraction and figuration into awe-inspiring masterpieces. Having exhibited globally, from New York to Beijing, Ana’s paintings are a physical, intuitive act rooted in movement. Described as a “beautiful fluorescent thunderstorm,” Ana’s art explores light and colour, capturing the energy of life itself.
The Fari Art Atelier which has previously hosted the likes of Daniel Arsham, Chris Stamp and David Nott, will be transformed into Ana’s studio and gallery showcasing her enthralling artworks—a mesmerising journey through poetry, memory, and the vibrant interplay of colour. Guests at Patina are invited to delve into Ana’s world, where each stroke reveals layers of meaning, evoking sensations of intense lightness and boundless interpretation.
At Patina Maldives, Ana will immerse herself in a month-long residency, inviting the Patina Malidves community or guests and team to witness her artistic fervour firsthand. Guests will have the rare opportunity not only to observe her creative process but also to engage with and create art alongside this luminary.
Experience artistry at its most exclusive
Art Exhibition
Experience Ana’s captivating exploration of colour and emotion in her spellbinding artworks displayed at the Fari Atelier.
Art Workshops: Message in a Bottle
As part of a collaborative artwork, Ana invites Patina guests to participate in short workshops, actively contributing to the creation of a permanent installation at Patina Maldives.
Open Studio Session
Join Ana for an exclusive open studio session, offering guests a behind the-scenes look at her creative process.
Ana Pušica residency package
Discover a world where creativity knows no bounds as Ana Pušica, the maestro of contemporary art, transforms Patina Maldives into an immersive canvas of inspiration.
Book now to secure your experience.
For more information and reservations, please visit Patina Maldives or contact
reservations.maldives@patinahotels.com
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