MMA reports low dollar exchange compliance among guesthouses

More than a third of tourism businesses classified under Category B have not exchanged any US dollars through commercial banks as required under foreign exchange rules, according to data released by the Maldives Monetary Authority (MMA) on Sunday.

The figures were published in an MMA compliance report on foreign currency conversion requirements.

According to the report, 625 establishments are registered under Category B, which covers city hotels, guesthouses, safari vessels and homestays.

Of these businesses, 48 per cent are exchanging dollars in accordance with the requirement, while 15 per cent are not exchanging dollars at the required level. A further 38 per cent have not exchanged any dollars.

The MMA also reported a decline in the submission of sales reports by businesses in the category.

When the foreign currency conversion requirements were introduced, 72 per cent of Category B businesses were submitting sales reports to the central bank. By the end of June, the proportion had fallen to 41 per cent.

“As these establishments are generally small and medium-sized enterprises, work is ongoing to give these parties further opportunities within the law and conduct additional awareness efforts to improve compliance,” the MMA said in its report.

The report also provided data on non-tourism businesses that earn foreign currency.

Under the existing framework, non-tourism businesses with annual foreign currency revenue exceeding USD 15 million are required to exchange foreign currency in accordance with the law.

According to the MMA, 33 per cent of businesses in this category are meeting their dollar conversion requirements.

However, 38 per cent are not exchanging dollars at the required level, while 29 per cent have not exchanged any dollars.

The MMA said several businesses covered by the requirement have applied to the authority seeking concessions.

The figures come as Parliament considers an amendment to the foreign exchange framework that would change the threshold applying to non-tourism businesses.

Under the proposed amendment, non-tourism businesses would be required to exchange foreign currency only when their annual revenue exceeds USD 25 million, up from the current threshold of USD 15 million.