Muizzu: Amendments shield small businesses from council firms

Dr. Mohamed Muizzu, President of the Maldives, has announced that a recent amendment to the Decentralization Act aims to prevent companies established by local councils from competing with small businesses operated by the general public.

Currently visiting Baa Atoll, President Muizzu addressed the community of B. Kendhoo, emphasizing that while the Decentralization Act outlines the powers and responsibilities of councils, many continue to engage in activities beyond their mandate. He stated that the solution lies in curbing the irregular use of funds by councils and empowering citizens directly, thereby truly "championing" decentralization.

The President highlighted concerns that local authority companies formed by councils frequently encroach upon and ultimately undermine the businesses of ordinary citizens. The recent amendments to the Decentralization Act, passed by Parliament, directly address this issue.

According to the new amendment, the business activities of local authority companies are now subject to specific limitations:

• Prohibition from Existing Private Sector Activities: These companies are now barred from engaging in economic activities already undertaken by private enterprises within their respective operating islands.

• Focus on Essential Infrastructure: Their work must be essential for rural infrastructure development, and projects will require a minimum investment exceeding MVR 10,000,000.

• Discontinuation of Conflicting Businesses: Any conflicting businesses operated by these companies must cease operations within 90 days of the amendment's enactment.

President Muizzu asserted that councils should focus on larger-scale projects rather than competing with the small businesses that support the livelihoods of citizens. He further stated that the current amendment facilitates this shift. He urged all councils to refrain from interfering with the small businesses of the populace, emphasizing that decentralization demands professional work, honesty, and accountability.

In a recent visit to Kamadhoo, President expressed dissatisfaction with the allocation of block grants from the state budget to councils. He cited awareness of potential misuse of revenue and block grants by some councils, referencing a newspaper report about an Atoll Council's trip abroad for "experience."

The President questioned the rationale behind such a trip, given the impending expiration of the councils' terms, and underscored the expectation for councils to have acquired necessary experience earlier in their tenure. This critique echoes a December 2024 directive from the Auditor General's Office, which called for action against the H.Dh. Atoll Council following a controversial trip to Bangkok, Thailand in 2023.

While the 20th Parliament, which holds a government supermajority, has amended the Decentralization Act multiple times, the opposition Maldives Democratic Party (MDP) has protested the government's reforms to the decentralization system. The MDP alleges that the interim government is restricting the powers of councils and subordinating them to the central government.

The bill was passed by Parliament on August 6th, despite concerns from some councils in the Maldives. However, President Muizzu has yet to ratify the bill.