Tourism properties undeveloped for 8 years and with dues topping USD 10M to be repossessed

The Tourism Ministry publicized a new regulation on Thursday that empowers the state to terminate the lease agreements for plots leased for tourism where no development works have been carried for eight years and where outstanding lease payments and fines amount to USD 10 million or more.

The new regulation, which took immediate effect upon publication on the Government Gazette, includes a provision on dealing with lands and lagoons leased for tourism where development works have remained stalled for a long time.

It states that plots leased for tourism where no construction work has been carried out even eight years from the deadline for development works and where outstanding lease payments and fines amount to USD 10 million or more will not be given any additional opportunity and will have the lease agreement terminated.

Properties where development works are incomplete will also be subject to termination of the lease agreement under the following circumstances:

• If the construction period has been extended beyond 60 months after the grace period
• Properties eight years into the lease period
• Properties with development works below 15 percent

Meanwhile, properties where development works are incomplete but have not received an extension following the expiration of the grace period and are not eight years into the lease period will be granted one opportunity to extend the construction period after the new regulation takes effect, but will have the lease agreement terminated if the property isn’t developed and operationalized within the given period.

 The regulation also empowers the Tourism Ministry to take action in accordance with lease agreement against properties that are eight years into the lease agreement, but have construction period left despite the development works being incomplete if an inspection establishes construction work is stalled or not being carried out at an appropriate speed.

If the lease agreement is terminated under this provision, then the lessee is required to clear all outstanding lease payments and fines.

Tourism Minister Mohamed Ameen stated during a press briefing on Thursday afternoon that the state is owed USD 537 million in payments from lagoons and islands leased for tourism where development works remain incomplete.

Ameen said that there were 128 properties leased for various tourism-related purposes where development works have remained stalled for a long time, some for over 25 years.

The latest statistics released by the Tourism Ministry shows the Maldives has 179 operational resorts.

Tourism remains the main driver of the Maldivian economy, with Tourism Goods and Services Tax (TGST) the biggest contributor to tax revenue – the biggest source of state revenue.

The latest statistics released by the Finance Ministry shows the state generated MVR 11 billion from GST as of August 27 - including MVR 7 billion from TGST.

The government has enacted a stringent new law to retain US dollar revenue generated by the country within the local economy. Resorts were initially ordered to exchange 20 percent of its monthly revenue with local banks, but the requirement was raised to 40 percent in August.