Nasheed warns 40% dollar conversion rule could bankrupt businesses
Nasheed said wealth generated through the use of the Maldives' natural resources was created through the combined contribution of businesses and their employees
Top Stories
Former President Mohamed Nasheed on Saturday warned that requiring businesses to convert 40 per cent of their foreign currency revenue through local banks could disrupt their finances and, in some cases, lead to bankruptcy.
Nasheed made the remarks in a post on X after Parliament passed amendments to the Foreign Exchange Act on Wednesday, increasing the foreign currency conversion requirement for resorts to 40 per cent of monthly revenue.
The measure has drawn opposition from resort operators and tourism industry groups, which have raised concerns over their need to retain foreign currency to meet expenses denominated in US dollars.
Nasheed said wealth generated through the use of the Maldives' natural resources was created through the combined contribution of businesses and their employees.
He said the wealth accumulated by business owners was the result of their work and investment, and argued that the financial position of businesses was linked to the wider economy.
According to Nasheed, requiring businesses to convert 40 per cent of their foreign currency earnings into rufiyaa could create an imbalance between their foreign currency income and expenses.
He warned that businesses unable to meet their obligations could face bankruptcy, which would in turn affect employment.
Nasheed also said the impact would extend to suppliers and other businesses dependent on the resort industry.
“This government is bankrupting the Maldives,” Nasheed said.
Under the amendments passed by Parliament, resorts are required to convert 40 per cent of their monthly foreign currency revenue through banks by the 28th day of the following month.
The legislation also introduces conversion requirements for other businesses in the tourism sector.
Tourist hotels and guesthouses are required to convert either USD 25 per tourist arrival or 20 per cent of their monthly foreign currency revenue.
The law also requires non-tourism businesses and entities, excluding financial institutions, with annual foreign currency revenue of at least USD 15 million to convert a portion of their earnings. For businesses subject to the general requirement, the conversion rate is 40 per cent.
