Committee holds closed-door meeting on forex law amendments

The Parliament's Public Accounts Committee on Sunday held a closed-door meeting to review proposed amendments to the Foreign Exchange Act that would remove the option allowing resorts to exchange USD 500 per tourist and instead require them to convert 20 per cent of their foreign currency revenue.

The bill was introduced in Parliament last Wednesday by Holhudhoo MP Abdulla Sattar Mohamed of the ruling People's National Congress (PNC) and subsequently referred to the committee for review.

Under the current Foreign Exchange Act, resorts classified as Category A tourism establishments can comply with foreign exchange requirements through one of two methods. They may either exchange USD 500 per tourist arrival recorded during a month or convert 20 per cent of their monthly foreign currency revenue.

The committee had initially planned to complete its review of the bill the day after it was referred. However, members later voted to extend the review period.

During Sunday's meeting, committee members met with senior officials from the Maldives Monetary Authority (MMA) at 2:00 pm. According to parliamentary proceedings, the MMA requested the meeting to provide information on the country's economic situation and monetary policy measures being implemented by the central bank.

The proposal to close the session to the public was submitted by Funadhoo MP Mohamed Mamdhooh and seconded by independent Guraidhoo MP Hannan Mohamed Rasheed.

Under the proposed amendments, resorts would no longer have the option of calculating their foreign exchange obligation based on tourist arrivals. Instead, all Category A establishments would be required to convert 20 per cent of their monthly foreign currency revenue through the banking system.

The proposed changes do not affect Category B tourism establishments, which include hotels, guesthouses and safari vessels. These businesses would continue to have the option of either converting USD 25 per tourist or 20 per cent of their monthly revenue.

The bill also proposes changes for non-tourism businesses earning foreign currency. The annual threshold requiring conversion of foreign currency revenue would be increased from USD 15 million to USD 25 million.

Under the proposal, non-tourism businesses that are fully Maldivian-owned would be required to convert seven per cent of their foreign currency earnings. Businesses without full Maldivian ownership would continue to be subject to the existing 20 per cent conversion requirement.

In addition, resorts would be required to deposit all foreign currency revenue into a designated account held at a bank licensed and operating in the Maldives and notify the MMA of the account details. Current regulations do not expressly require such accounts to be maintained with banks operating within the country.

The committee is expected to continue its review of the bill before submitting its recommendations to Parliament.