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An uninhabited island.

Maldives allows industrial island leases without bidding

According to the regulations, the president, under Economic Council advisory, has the authority to declare an island as an industrial island.

19 May 2023

A regulation has been framed and implemented to allow uninhabited islands to be leased out for economic purposes without open bidding.

As per the 'Rules for Leasing of Uninhabited Islands for Development for Economic Purposes' notified by the economic ministry on Wednesday, uninhabited islands other than those falling under certain sectors can be leased for economic purposes.

The uninhabited islands that cannot be leased without bidding are:

  • uninhabited islands leased under the Tourism Act

  • uninhabited islands leased for fishing and agriculture

  • uninhabited islands under the local 'Varuva' scheme

According to the regulations, the president, under Economic Council advisory, has the authority to declare an island as an industrial island for carrying out economic activities.

If an island designated as an industrial island is in the jurisdiction of an island or a city council, it should be removed from the jurisdiction of the council and included in the list of industrial islands to be prepared under the new regulations.

There are two ways in which islands earmarked for economic purposes can be leased out: 

  • Open bidding; to the highest bidder

  • Under the Unsolicited Proposal Policy (the policy of submitting proposals to the government without inviting bids); the island can be leased to the party that makes the best proposal to carry out permitted economic activities

For islands leased under the Unsolicited Proposal Policy, the economic ministry has the right to make conditions for payment in the form of acquisition fee. The acquisition fee will be decided by the Economic Council based on the works proposed to be done in the island, the nature of the industry and the investment value.

As per the rules, economic ministry will decide the annual lease rent, with the rent not being less than 10 lari per sqft per year.

Important provisions:

  • An agreement has to be signed between the lessee and the ministry

  • The agreement should have details such as lease period, lease rental, methods of payment, proposed and permitted activities, dispute resolution, and termination

  • Islands can be leased for a period of 21 years; the ministry may extend it to a maximum period of not exceeding 50 years if an extension is sought by the lessee

  • The extension can be granted only if at least 75% of the proposed investment has been made, the work is carried out as per schedule and at least 75% of the work has been completed

  • Lease period extension fee of MVR 5,000 will be charged

Any violation will attract a fine not exceeding MVR 1 million depending on the gravity and nature of the violation,

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