Govt says 40% resort dollar rule followed industry consultations

The government said on Saturday that the requirement for resorts to convert 40 per cent of their foreign currency revenue through local banks was introduced after consultations with tourism industry stakeholders, including the Maldives Association of Tourism Industry (MATI).

Chief Government Spokesperson Mohamed Hussain Shareef made the remarks during a briefing with journalists, as the government faces criticism from tourism businesses over the foreign exchange policy.

Amendments requiring resorts to convert 40 per cent of their monthly foreign currency revenue through local banks came into force on Monday.

MATI, which represents resort owners and operators, has opposed the requirement, saying the sector has foreign currency expenses that make the 40 per cent rate difficult to meet.

Shareef said the government conducted research into measures to address the shortage of US dollars before deciding on the policy.

He said experts from the Ministry of Finance and other government agencies collected data and statistics as part of the process.

According to Shareef, the government also held several discussions with MATI on measures to address the foreign currency shortage, including the proposal for resorts to convert 40 per cent of their revenue.

“We told them that we wanted to move forward on this matter with their advice, input and partnership,” Shareef said.

“We asked them to share accurate information and requested their cooperation. We also held individual discussions with key industry figures.”

Shareef also criticised some industry figures over their conduct following the discussions.

He alleged that about seven or eight businesses had routed around USD 79 million into the parallel foreign exchange market over the past three to four months.

The spokesperson did not identify the businesses or provide further details to substantiate the allegation.

MATI said in a statement on 24 August that the 40 per cent requirement would place a financial burden on resorts because a large share of their expenses are paid in foreign currency.

“Resorts must pay in USD for fuel, staff salaries, service charge, supplies, logistics and guest transfers,” MATI said.

“In addition, TGST, Green Tax, withholding tax, income tax, tourism land rent and foreign currency debt repayments are all settled in USD.”

The government maintains that increasing the amount of foreign currency converted through banks will improve access to dollars through the banking system.

The 40 per cent requirement replaced the previous revenue-based conversion rate of 20 per cent for resorts.