President Dr Mohamed Muizzu has ratified the new Foreign Investment Bill, marking a significant step in modernising the legal framework for foreign investment in the Maldives. The newly ratified bill replaces the 45-year-old Foreign Investment Act, which had been in force since 1979, and aims to create a more favourable environment for attracting foreign capital, technology, knowledge, and skills to the country.
The updated legislation sets out clear guidelines for foreign investment, including the sectors in which foreign investors can operate, the conditions under which they may invest, and the procedures for obtaining the necessary permits. The law’s primary objectives are to increase foreign investment and ensure a balanced approach to opening up business opportunities, thereby enhancing economic growth and development in the Maldives.
One of the notable features of the new Act is the structured approach to identifying and assessing potential areas for foreign investment. The government is now tasked with identifying, studying, and preparing feasibility reports on business opportunities across various sectors. These reports are crucial in determining the sectors where foreign investment is encouraged, restricted, or subject to specific conditions. The Act mandates that the decision on these sectors be made in consultation with the Cabinet and published in the Government Gazette.
In addition to defining the areas open for investment, the law also specifies areas where foreign investment may pose risks. Key considerations include whether such investments could threaten national security, impact the competitiveness of local industries, or interfere with the development of domestic businesses. The Minister responsible for implementing the Foreign Investment Policy is empowered to make these determinations, ensuring that the country’s economic interests are safeguarded.
Furthermore, the new law introduces stricter regulations for obtaining investment permits. Foreign investors are required to obtain a special license to operate in the Maldives, and the Ministry of Economic Development and Trade must decide on permit applications within 30 days, provided all regulatory requirements are met. This streamlined process is expected to enhance transparency and reduce bureaucratic delays, making it more attractive for foreign investors to enter the Maldivian market.
The Act also includes robust enforcement mechanisms to ensure compliance with the new regulations. Penalties for non-compliance are severe, including fines of up to 30 percent of the total business value for conducting business activities beyond what is permitted under the licence. Additionally, submitting incorrect information when applying for a foreign investment licence can result in fines ranging from MVR 100,000 to MVR 1 million.
Overall, the new Foreign Investment Bill represents a significant overhaul of the existing legal framework, bringing it up to date with contemporary standards and practices. By providing a clearer and more efficient pathway for foreign investment, the Maldives is poised to attract a more diverse range of investors, fostering economic growth and development while safeguarding the nation’s strategic interests.
