Former President Abdulla Yameen has called on resorts to oppose the legal amendment mandating that 40% of foreign currency income from resorts be converted to Maldivian rufiyaa.
Speaking at a People’s National Front (PNF) rally held in Fuvahmulah, Yameen said resorts must publicly declare that they do not accept this condition, and that it places a heavy burden on the industry.
“Every resort. All resorts. This is not just a matter for MATI [Maldives Association of Tourism Industry]. Individual resorts must courageously say they do not accept this [40% conversion condition]. They must clearly state that this burden cannot be borne,” Yameen said.
Yameen characterized forcing resorts to convert a large share of their revenue through legal amendments as a harsh measure.
He noted that resort operators had previously stated that no condition above 10% would be acceptable. Because dollars are needed to repay loans taken to develop resorts, mandating the conversion of a large portion of revenue poses a threat to financial stability, he said.
“President Muizzu needs to understand this. If he does not, then the Governor of the MMA, who plays an important role in financial matters, must understand. That person also served in my government. Even if such things are passed into law, they must realize this is choosing a harsh path,” Yameen said.
“The tourism industry advised in earlier discussions that anything above 10% would be difficult. Resorts incur large expenses in dollars. Loans taken to build resorts cannot be repaid in Maldivian rufiyaa.”
Under the amendment to the Foreign Exchange Act passed by Parliament last week, tourism businesses earning less than $25 million annually must convert 40% of their foreign currency income into Maldivian rufiyaa. The change made to ‘Category C’ businesses raised the annual revenue threshold from $15 million to $25 million.
The government says these legal changes, combined with strict enforcement measures, will eliminate the dollar black market and resolve the current foreign currency shortage. However, opposition figures and economic experts warn that these measures could worsen the country’s dollar crisis.
