The Government has recalled the proposed amendment to tourism land rent rates, following intense public criticism.
The government denied that the amendment was recalled due to public criticism. The decision to recall, sources said, was due to high prices of fuel and other good in the market, primarily driven by the Ukraine-Russia conflict.
Even until Tuesday, Tourism Minister Dr Abdullah Mausoom had vouched for the bill. He said that by reducing rents, resort owners would have more money to invest in other projects – what is commonly referred to as ‘trickle down economics’.
Central Bank Governor Ali Hashim had argued against it. He cited that any change to revenues, amid supply chain risks, would exacerbate current economic status. Governor Hashim said that the world was still reeling from the continued conflict between Russia and Ukraine. Supply chain disruptions, slowed down economic growth following the pandemic, and lower number of travelers globally are still present and very real threats.
JPMorgan had also issued warnings on the economy, stating that Maldives was listed as facing critical risk, anticipating that the country could exhaust foreign reserves and could default by the end of 2023.
It is estimated that the any downward revisions to tourism land rents would incur the state losses of around MVR 590 million (US$ 38.2 million).