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Spreading Wealth
26/06/2005-Ahmed
Zubair Adam, via e-mail|
The contrast
between the wealth created from tourism and the poverty of
most local people has been highlighted in a United Nations
report which says 42 percent of the population of the Maldives
lives on less than US$1.17 per day, and half of those are
significantly below the generally accepted international
poverty threshold of US$1.00 per day. Thus this highlights the
need for economic development inline with economic growth of
Maldives.
The economic growth of 8.5% in Maldives can be mainly
attributed to the
growth of tourism industry (33% of GDP is Tertiary which
includes Tourism). The GDP of our country according to
Ministry of Planning is US$ 2261 per capita and Maldives now
is ranked 84th on the Human Development List.
The government recently concluded the bidding of 11 islands
for development into tourist resorts and the winning factor
was the bed rent as the bulk of the points were scored by
this. Hence the bidders had to propose luxury or high market
resorts to propose high bed rents and there is concern that
Maldives is losing the charter market segment of middle income
tourists who can afford 3 to 4 star resorts.
The Maldives stock exchange has only 3 public limited
companies (setup by the government) and the government of
Maldives has tried to foster economic development by offering
special considerations for public companies when bidding for
new resorts. However for various reasons public companies have
not been formed to bid for tourist resorts or for any other
purpose.
Therefore since the incentive has not worked, the government
could consider taking the initiative to setup a few public
companies purely to own new resort islands and the shares of
these companies can be sold to the general public of Maldives.
The government can own certain amount of shares as the
uninhabited island can be considered the government's
investment in the company and also government owned companies
such as Island Aviation Ltd. and Maldives Airports Company Ltd
etc. could buy stakes in the company. Thus the government can
generate income without imposing a bed rent.
To solve the issue of shares, the government could get Bank of
Maldives
using the regional branches in the atolls to issue initial
public offering
of these companies to the island communities and if required,
a quota can
be set for each island (including Male') or to the atolls.
The missing 3 star category can be developed on these
islands.These new resorts can be managed by the holding public
company by hiring professional local or international managers
or alternatively can be given to another local private company
to be operated as part of their hotel chain.
By doing the above or something similar, the Maldives Public
Companies in the stock exchange will increase, the income
distribution will become better and the 3 star category
resorts can be developed to cater to the market segment of
‘the charter flights and middle income tourism’ and last but
not least, the government can generate revenue.
Something
similar can be done for the fisheries companies. Even MIFCO
could be made a public company and shares can be sold to the
public.
The objectives of this suggestion are:
1. Giving the opportunity for the general public to
participate and
earn an income from tourism (or fisheries).
2. Recapturing the 3 star resort category tourism (charter
flight
market) in Maldives
3. Increasing the companies floated in Maldives Stock Exchange
4. Raising finance within Maldives public
5. Creating more jobs in Maldives
Note:
Statistics from 2004 Maldives Statistics Section and UN’s
Human Development
Index 2004.
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