Only companies in which the government holds a minimum ownership stake of 45% will be eligible to lease islands, land or lagoons for the development and operation of tourist resorts and integrated tourist resorts under new regulations introduced by the government.
The regulations, which govern the leasing of islands, land and lagoons to state-owned enterprises (SOEs) for tourism development, outline the eligibility criteria, approval process, operational requirements and financial obligations applicable to such projects.
Under the regulations, islands, land or lagoons can only be leased following approval by the Cabinet. Both the location proposed for development and the state-owned company selected to undertake the project must receive Cabinet approval before a lease agreement can be issued.
The regulations also require the selected company to demonstrate that it possesses the necessary financial and technical capacity to develop and operate a tourist resort or integrated tourist resort.
State-owned companies granted leases under the regulations will be required to pay a lease acquisition fee determined by the Ministry of Tourism and Environment. In addition, companies must contribute to Corporate Social Responsibility (CSR) initiatives or finance development projects specified by the ministry. A detailed expenditure plan must also be submitted to the ministry.
Before any island, land or lagoon can be leased under the regulations, the location must first be designated for tourism purposes by the President of the Maldives.
The regulations further require that full details of the transaction be submitted to both the Auditor General’s Office and the Ministry of Tourism and Environment within 14 days of signing the lease agreement.
The government may also impose a condition requiring a state-owned company to contribute USD 500,000 to the Tourism Trust Fund or spend an equivalent amount on approved community development projects. Eligible projects include the construction of social centres on inhabited islands, human resource development initiatives, football stadiums and artificial turf pitches.
The regulations also allow the government to require funding for other projects deemed necessary to support specific national development policies.
In addition, the regulations establish a framework for state-owned companies seeking to develop tourism facilities on inhabited islands. Where a company intends to develop a hotel or guesthouse, the relevant island, land or lagoon must first be designated for tourism purposes by the President.
Any allocation of an island, land or lagoon under the regulations must be formalised through an agreement signed between the Government of Maldives and the recipient state-owned company.