MTDC faces losses due to Tourism Act: Managing Director

Maldives Tourism Development Corporation (MTDC) has said that the reason behind the corporation making losses year after year, is the Tourism Act.

Managing Director of MTDC Mohamed Matheen said in a special interview with Sun Online last Thursday, that the changes made to the Tourism Act in 2010 allows only institutional investors, resulting in individual investors being denied the opportunity to invest in the tourism industry.

He highlighted that it is a serious problem, as the 25,000 shareholders of MTDC are denied their right to invest.

Matheen said that acres of land had been leased to MTDC, which require huge investments; however, the development of these spaces is obstructed by high rates for rent.

“Land leased from inhabited islands can be used to build city hotels, but they are given at the same rate. This results in disadvantages when compared with separate island resorts. Places for which liquor license cannot be obtained are also leased at $8,” he said.

MTDC’s financial statements for the past six months show record low profits, with a MVR43 million decline when compared with the corresponding period last year.

The company’s asset which results in the biggest losses is its resort in Addu Atoll, Herethere.

Matheen said that Herethere has been taken over by several parties but they have all ended in failure, and that the reason behind this is the obstructions imposed by Tourism Act.

“We blame them, and don’t bother to address the real problem. The real problem is that the operating cost of Herethere is as high as 21 per cent,” he said.

Matheen said that the Tourism Act also causes problems for the Tourism Ministry, and that some new proposals have had to be returned because they do not meet the requirements of the Tourism Act.

Matheen said that the regulation requires urgent revision to facilitate expansion of the tourism industry, and unless this is done, the industry might face severe losses.

The revision made to the Tourism Act stipulates that, where the land area is less than 200,000 square metres and the rent payable exceeds $1,000,000, the rent payable annually shall be fixed at $1,000,000; where the rent payable from the land is less than $1,000,000, the rent payable annually shall be at the rate of $8 per square metres of land; where the land area is between 200,001 square meters and 400,000 square meters, the rent payable annually shall be $1,500,000; and where the rent payable from a land larger than 400,001 square metres exceeds $2,000,000, the rent payable annually shall be $2,000,000.

MTDC filed several cases to Court following these changes to the regulation, and according to MTDC, if the rulings on these cases do not favour MTDC, the government and the corporation will be faced with a loss of MVR725 million.

“This would be a great loss for the 25,000 shareholders of this company. We can’t do any business, or make any business plans, due to this factor,” Matheen said.

The revisions to the Tourism Act also, however, resulted in reduction of rent for several groups, including Nasandhura Palace Hotel.