Know decentralisation from A to Z, fully accept it: President
The amendments were passed by Parliament on Wednesday but await presidential approval.
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President Mohamed Muizzu has defended the recent amendments to the Decentralisation Act, stating that the changes aim to protect small businesses, ensure transparency, and strengthen governance.
Speaking to residents of B. Dharavandhoo on Wednesday, the President rejected claims that the amendments limit the powers of local councils or undermine the decentralisation system. He said his experience as former Mayor of Malé had given him practical knowledge of how the system operates.
“The councils should function in a way that benefits and empowers the people,” he said.
According to the President, one of the amendments addresses the establishment of Local Authority Companies by some councils to run businesses also operated by private individuals in their communities. The changes will prohibit councils from engaging in small-scale businesses run by residents. Businesses with investments exceeding MVR 10 million will be allowed, provided profits are used for community projects.
The amendments also introduce measures to reduce the cost of basic services by preventing public utilities from charging rent for land or buildings allocated for service provision. Councils will be required to pay taxes on their business operations and submit financial information to the Local Government Authority (LGA) for oversight.
The bill restricts certain council activities in the final year of their term, unless approved by the government. These include hiring permanent or contract employees, leasing or granting land under council jurisdiction, and starting new development projects not included in existing plans.
The scope of council-run businesses will be limited to projects not competing with private enterprises, essential for structural development, and involving investments above MVR 10 million. Businesses that do not meet these conditions must cease operations within three months.
Additional provisions require council bank accounts to be maintained according to Ministry of Finance rules, with account statements provided on request. Funds transferred from the State will be net of taxes and utility arrears, with outstanding amounts of more than six months to be deducted.
The amendments were passed by Parliament on Wednesday but await presidential approval.
