Parliament passes 40% dollar conversion requirement for resorts
Resorts will be required to convert 40% of their foreign currency revenue for each month through a bank by the 28th of the following month.
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Parliament on Wednesday passed amendments to the Foreign Exchange Act requiring resorts to convert 40% of their monthly foreign currency revenue into Maldivian Rufiyaa through local banks.
The bill was passed with 47 votes in favour and 12 against.
The government initially submitted the amendment to remove the option allowing resorts to meet their conversion obligation by exchanging USD 500 per tourist. The bill instead proposed requiring resorts to convert 20% of their foreign currency revenue.
The legislation was introduced on behalf of the government by Holhudhoo MP Abdul Sattar Mohamed.
After the bill was reviewed by committee and returned to the Parliament floor, it was recommitted to incorporate further changes announced by Maldives Monetary Authority (MMA) Governor Ahmed Munawwar on Monday.
These included increasing the conversion requirement for resorts from 20% to 40% and changing the conversion cycle from once every three months to once a month.
Funadhoo MP Mohamed Mamdooh submitted the changes announced by the Governor as amendments to the committee report during Wednesday’s sitting.
Amendments proposed by opposition MPs were rejected.
Under the legislation passed by Parliament, resorts will be required to convert 40% of their foreign currency revenue for each month through a bank by the 28th of the following month.
For tourist hotels, guesthouses and other establishments covered under the relevant category, the law provides an option to convert either USD 25 per tourist or 20% of monthly foreign currency revenue.
The amendments also apply conversion requirements to businesses outside the tourism sector.
Non-tourism businesses and non-financial institutions earning foreign currency revenue equivalent to USD 15 million or more will be required to convert 40% of their foreign currency income.
However, businesses in this category that are wholly Maldivian-owned will be required to convert 7% of their monthly foreign currency income.
The changes follow an announcement by Governor Munawwar at a press conference at the President’s Office on Monday. He said the MMA intended to raise the conversion requirement for resorts to 40% and reduce the conversion period from three months to one month.
The amendments come amid a shortage of US dollars in the banking system and a rise in the parallel market exchange rate.
Parliament also approved penalties relating to foreign currency transactions outside rates authorised by the MMA.
The amendments provide for fines of up to MVR 1 million for specified offences involving the sale of foreign currency outside authorised rates. They also introduce penalties relating to the publication, promotion or dissemination of information facilitating foreign exchange transactions at rates outside those set by the MMA.
