SOEs required to have 45% govt shares to venture into resort development

State-Owned Enterprises (SOEs) have been required to maintain a minimum government shareholding of 45 percent to qualify for the lease of lagoons or land designated for resort development.

The requirement is set out in a newly introduced regulation governing the lease of islands, land, and lagoons to state-owned companies for the development and operation of tourist resorts and integrated tourist resorts. The regulation specifies the conditions and criteria under which such properties may be leased to state enterprises for resort development.

 In this regard, any proposal to lease a property to a state-owned company must first be reviewed and approved by the cabinet.

The designated state enterprise must demonstrate adequate financial resources and technical expertise to carry out the resort development project. Furthermore, the government must hold at least a 45 percent stake in the company for it to be eligible to obtain such a lease.

The regulation also requires that the lease of any island, land, or lagoon to a state-owned company be formalized through a legally binding agreement between the government and the leasing entity.

The move comes amid increasing concerns over the expanding role of state-owned enterprises in sectors traditionally served by private businesses, as well as allegations of preferential treatment in the allocation of major projects. Critics have argued that government participation in commercial activities typically undertaken by the private sector is limiting opportunities for private businesses and affecting their growth and profitability.