MATI: Exchanging 40% of USD earnings is not a burden resorts can bear

The Maldives Association of Tourism Industry (MATI), on Monday, said that requiring resorts to exchange 40 percent of their foreign currency earnings through local banks would place an unsustainable burden on the industry.

Speaking at a press conference on Monday, Maldives Monetary Authority (MMA)’s Governor Ahmed Munawar announced plans to propose amendments to the foreign exchange regulations that would require resorts to exchange 40 percent of their US dollar revenue.

In an announcement following the decision, MATI said its Executive Board had been summoned to the President’s Office on Sunday for an emergency meeting with Cabinet ministers and senior government officials. According to MATI, the association was informed during the meeting of investigations allegedly indicating that some resort operators were involved in black-market foreign exchange transactions and the artificial inflation of the US dollar exchange rate.

MATI categorically denied having any knowledge of such activities among its members.

The association said the decision to increase the mandatory foreign currency exchange requirement was subsequently announced at Monday’s press conference.

MATI said it believes implementing a blanket industry-wide policy based on allegations involving specific resort operators is inappropriate. The association also maintained that attributing the increase in black-market exchange rates solely to resort operators is neither accurate nor fair.

The association noted that it had been invited to meet with the MMA Governor earlier this month to discuss foreign exchange requirements. During that meeting, MATI said the MMA proposed eliminating the existing option of exchanging USD 500 per tourist and replacing it with a uniform 20 percent exchange requirement for all Category A establishments.

MATI said its longstanding position has been that the exchange requirement should not exceed 10 percent. The association also called on authorities to review and expedite decisions on legal submissions made by resorts seeking exemptions on the grounds that they are unable to comply with existing exchange requirements.

Against this backdrop, MATI expressed serious concern over the proposal to raise the exchange requirement to 40 percent, describing it as a 100 percent increase from the initial proposal made shortly after the meeting.

The association argued that exchanging such a substantial portion of foreign currency earnings is not feasible for the tourism industry, as resorts already have significant foreign currency obligations, including payments for fuel, salaries, service charges, supplies, logistics, tourist transportation, TGST, Green Tax, withholding tax, income tax, tourism land rent, and repayment of foreign currency loans.

Representing 146 resorts, MATI noted that its members are among the largest investors in the Maldivian economy and the country’s primary sources of foreign currency generation and exchange. The association emphasized that the industry has consistently engaged with the government in good faith on critical national economic issues, including the country’s foreign exchange situation.

While reaffirming the industry’s commitment to continued cooperation, MATI said it remains ready to engage in constructive dialogue with the government, the MMA, and other stakeholders to develop fair, sustainable, and fact-based solutions.