The government has proposed a major amendment to the Special Economic Zone (SEZ) Act aimed at attracting large-scale foreign investment and facilitating the creation of Sustainable Townships across the Maldives.
The amendment, presented to Parliament by Baarah MP Ibrahim Shujau on behalf of the government, received its first reading on Monday. It marks the first proposed revision to the SEZ Act since its introduction in 2014.
Under the proposed changes, Sustainable Townships are defined as large-scale real estate or integrated tourism developments that are centrally managed and designed with sustainable infrastructure to reduce environmental impact. These developments are required to include residential facilities, essential services, and public utilities within the zone.
To qualify for establishing a Sustainable Township, investors must commit a minimum investment of USD 500 million. Projects must feature integrated tourism or large-scale real estate developments offering a range of residential and luxury services, along with either an international standard hospitality training centre or a healthcare facility.
The proposed legislation also sets sustainability standards, requiring at least 60 percent of operational energy to come from renewable sources, self-sufficiency in energy generation and waste management, and the inclusion of sustainable or co-agriculture facilities to support local food production. Developers would also need to ensure that housing, education, healthcare, and recreational facilities are provided through environmentally sustainable infrastructure.
To encourage investment, the amendment includes fiscal incentives. Developers will benefit from a tiered income tax regime, starting with a five percent rate for the first 10 years, increasing to 10 percent for the following 10 years, and reverting to the standard rate under the Income Tax Act thereafter. Additionally, investors would be exempted from import duty on capital goods used for development within the zones.
The bill stipulates that implementing regulations must be published in the government Gazette within six months of enactment. The amendments will come into force immediately after parliamentary approval, presidential ratification, and publication, setting the stage for the establishment of new investment-driven Sustainable Townships in the country.
