Prominent tourism leader Champa Mohamed Moosa has formally requested the Maldives Monetary Authority (MMA) to suspend its newly introduced foreign exchange regulations targeting tourism businesses. In a letter addressed to MMA Governor Ahmed Munawar, Moosa expressed serious concerns over the potential impacts of the regulation, which was implemented without prior industry consultation.
The regulation, effective from 1 October 2024, requires tourism establishments to deposit all foreign currency earnings into designated bank accounts within the Maldives by the 28th day of the third month following each transaction. Additionally, Category A tourism operators must deposit a fixed sum of $500 per tourist each month.
Moosa’s letter raised several objections, describing the new rules as “unfair and impractical.” He argued that the sudden implementation, without engaging with industry stakeholders, places significant pressure on operators who are already navigating economic challenges. Moosa highlighted that these requirements are not suited to the operational realities of resorts, which already contribute significantly to the national economy through taxes, rents, and fees.
Concerns Raised by Mohamed Moosa
Key issues outlined in the letter include:
- Lack of Industry Consultation: The regulation came into force immediately after being gazetted, leaving businesses no time to adjust to the new requirements.
- Uniform Exchange Rate: The regulation applies the same fixed exchange rate to all resorts, regardless of market segments and varying average daily rates (ADR). Moosa contended that this one-size-fits-all approach could place undue financial strain on establishments, particularly those operating in lower market segments.
- Operational Realities Overlooked: The new rules do not account for business needs like complimentary stays for familiarisation trips and tour operations, which involve a substantial number of room nights annually. This could force resorts to cut back on costs, potentially affecting employee welfare and service quality.
- Debt Repayment Challenges: Moosa also highlighted the significant investments made by resorts, with over USD 70 million yet to be repaid. The additional financial burdens imposed by the regulation may erode profitability and deter future investments, which could threaten the long-term viability of the industry.
Call for Reconsideration
Moosa urged the MMA and the government to immediately suspend the regulation and collaborate with industry stakeholders to create a more sustainable framework. He warned that the current regulations could undermine investor confidence, leading to far-reaching negative consequences for the Maldivian economy, especially for small and medium enterprises.
With more than four decades of experience in the tourism sector, Moosa’s concerns echo those of many in the industry, who fear that these regulations could inadvertently impact the Maldives’ standing as a leading global tourist destination.
The letter, which was also sent to the President’s Office, the People’s Majlis, the Ministry of Tourism, and other relevant bodies, highlights the need for a thoughtful review to ensure that the policy does not cause lasting damage to the industry.
