Wednesday, December 03, 2008

Resort Lease extension! Unjustified!

A lot of debate and protests have been ongoing about the extension of the lease of resorts from 25-35 years to 50 years. Even some parliamentarians are thinking to extend the lease agreement up to a limit of 99 years or more. I thought I would briefly comment on the arguments proposed by the current government on the reasons for the change!

The current coalition government has the control of the parliament until the next general elections which is scheduled for February of next year. The current government is now accused of speeding up all the bills which are necessary for their own personal gains rather than the benefits of the general public. The resort extension follows the same path.

Firstly, the only asset that we have in the Maldives and our whole economy is NATURAL RESOURCES! The whole economic development in the Maldives is based selling these natural resources. To be precise it is based on fishing and tourism. But we have to note in any case, natural resources are limited and in some point or the other it would deplete and we would not be able to enjoy the benefits for prolong. So, if we want to sell these natural resources or 800 or so islands to the rich and wealthy businessmen for 50 years, would be we able to enjoy the maximum benefits from it? It doesn’t make sense at all!

When we ask to increase resort lease extension to 50 years, it has to be backed with necessary figures. For example, what would be the forecasted demand patterns for the period and how much would we be able to accumulate as resource rent based on inflation rates, interest rates, etc. Tourism forecasting is quite difficult, but could derive an approximate figure, which we could justify whether it is feasible for us to give away for 50 years. These decisions should be based on not only on investors but including social costs and benefits as well. Ultimately the revenues generated by the industry are spent to improve the social condition of the citizens of Maldives.

The resort owners now say that everyone in Maldives cannot be resort owners. So the people who are resort owners should be able to sustain their investment! Yes! It’s true. Everyone cannot be resort owners. But wasn’t lolly Jabir, once a normal citizen like us selling lollypops. No one knows what would happen in the future. Everyone in the Maldives should have a fair and equal opportunity to compete.
The main argument proposed the resort owners is the unavailability of funds from banks. It is truly misleading comment by them. The whole world economy is currently in a huge recession and economists fear that the worst is yet to come. Hence, the banks would be reluctant to give loans and funds to any company whether their lease period is 50 years or even 99 years. Let’s look for typical a Maldivian businessman who owns resorts. These resort owners would have 2 resorts that’s been operating and four or five in construction! How would they be able to gain funds for these four or five resorts at the same time! And these resort owners would not just borrow funds for their business in resorts, but for all their other business as well. The banks might be willing to give the loans to the businessman for a limited time, but after sometime these resort owners would be again asking for an extension.

A four star resort sells their beds at a rate of 300 – 400 dollars per night and the general public or the government gets only 8 dollars per bed irrespective of their price. Even if the bed is sold at 10,000 dollars, the government would only get 8 dollars?

People like us are suffering from the bad practices that’s been utilized by the businessmen in the Maldives. It’s not we who have to surrender all our lands for the benefits of the politicians and the rich and wealthy businessmen.