President warns resort owners against underreporting revenue: 'Select few can't enrich at public’s expense'

President Mohamed Muizzu on Monday warned resort operators against underreporting revenue to avoid the new 40 per cent foreign currency conversion requirement, saying the government has introduced mechanisms to detect attempts to circumvent the law.

Muizzu made the remarks while responding to questions from reporters following the ratification of amendments to the Foreign Exchange Act at the President’s Office.

The amendments require resorts to convert 40 per cent of their monthly foreign currency revenue through local banks.

The tourism industry has raised concerns that the requirement could affect the ability of resorts to meet foreign currency obligations, including external loan repayments, salaries and operating expenses.

Muizzu rejected those concerns, saying resorts would be able to meet their financial obligations while complying with the conversion requirement.

“There is no resort in the Maldives that cannot exchange this 40 per cent. They can comfortably pay their loans, cover employee salaries, pay expenses, and run daily operations while exchanging this amount,” he said.

The President also addressed reports that some business figures had indicated that revenue could be underreported to reduce the amount of foreign currency required to be converted.

“Some parties are saying they will send financial records showing they didn't earn revenue. People may try to cheat or lie, but mechanisms to stop that have also been introduced in today's legislation,” Muizzu said.

He said systems being introduced by the government would allow authorities to track tourist movements and accommodation records.

“Starting a month from now, our systems will officially show when a tourist enters the Maldives, where they went, where they slept, and when they departed,” he said.

Muizzu said the government would apply the rules without giving preferential treatment to particular individuals or businesses.

“This government will remain resolute in establishing rights. When delivering justice, we will not favour any specific person or discriminate. Why should a select few get rich while everyone else suffers? That should not happen,” he said.

The President also alleged that some individuals had previously urged him to reduce government spending and halt development commitments instead of pursuing measures to increase the amount of foreign currency entering the banking system.

He further alleged that those individuals had warned that the parallel market exchange rate would be driven higher if the government continued increasing expenditure on development.

“When I started working on this, some figures told me to cut the budget and stop fulfilling promises to the public. I have the text messages. They warned that if we increase the budget to bring development to the people, they will drive up dollar prices on the black market,” Muizzu said.

The President did not identify the individuals he was referring to or provide the messages during his remarks.

“These resorts are being operated in the Maldives. They are assets of this state,” Muizzu said.

The 40 per cent conversion requirement is part of amendments to the Foreign Exchange Act ratified by Muizzu on Monday. The changes take effect on Tuesday.

The Maldives Association of Tourism Industry (MATI) has previously raised concerns over the requirement, arguing that resorts have foreign currency obligations covering areas including loans, salaries, service charges, fuel, supplies, logistics, taxes and land rent.