A new regulation has been introduced stipulating that the maximum extension that can be granted to the construction period of a plot allocated for tourism development, where development has not been completed within the period specified in the agreement, is 12 months. With the publication of the new regulation in the Gazette, the previous regulation that had been in force since 2022 has now been revoked.
The Ministry of Tourism and Civil Aviation has formulated a new regulation governing the granting of additional time to develop sites allocated for tourism purposes where development remains incomplete, as well as the procedures for deferring rent and fines. The regulation sets out how action will be taken against sites where the deadline given to fully develop the leased site has expired, as well as sites where the deadline for completing different phases of the leased site has passed.
Speaking at a press conference held at the President’s Office regarding the new regulation, Minister of Tourism and Civil Aviation Mohamed Ameen said that islands and lagoons had been allocated to some parties for tourism purposes for long periods, but that actual development work had not commenced even after several years. He said that this was an issue involving the rights of the public.
According to the Minister, commencing operations at such islands would create more employment opportunities, increase green tax and TGST revenue, and ultimately increase government revenue.
Minister Ameen said that 168 sites allocated for various tourism purposes had been identified as having remained undeveloped for a considerable period. He added that the sites were at various stages of development, including some for which financial institutions had already provided bank loans.
Under the regulation, a fee of USD 100,000 must be paid when an extension is sought for the development period of a site allocated for tourism purposes. The regulation has also been amended to allow expenditure on government projects to be treated accordingly.
The construction period for a plot may be extended by a maximum of 12 months, while the period for a lagoon may be extended by a maximum of 24 months. The minimum extension period is one month. The fee must be paid within 30 days, including government holidays, from the date on which conditional approval is granted. If the payment is not made, the Ministry has the authority to revoke the approval and take further action.
Under the newly introduced reforms, where eight years have elapsed since the development period expired and actual development work has not commenced, the Ministry has the authority to terminate the agreement without granting any further opportunity if the rent and fines owed to the government exceed US$10 million.
In addition, the regulation states that agreements for sites where the construction period has exceeded 60 months after the grace period, or where eight years have elapsed since the site was leased and less than 15 per cent of the actual work has been completed, may also be terminated immediately.