Within the span of a week, President Dr. Mohamed Muizzu established two new state-owned enterprises (SOEs), aiming to address financial and infrastructural needs. However, these moves stand in stark contrast to his earlier efforts to reduce the SOE footprint through mergers and dissolutions. As the number of state-owned entities continues to grow, so do questions about their effectiveness, economic viability, and long-term relevance.
New SOEs: Visionary or Redundant?
The recently formed Infrastructure Development Solution Company Limited (established May 30) and Greater Malé Financial District Limited (established June 2) have been positioned as strategic tools to drive economic transformation. While the former will focus on infrastructure and construction nationwide, the latter seeks to establish the Maldives as a regional financial hub through initiatives in digital finance, real estate, and financial tourism.
Both companies are capitalised through state funding—MVR 100 million and MVR 1 billion respectively—sharing a similar structural model in terms of share value. These new ventures highlight the President’s ambition to modernise and diversify the economy through state intervention and technological innovation.
However, this expansion of the state-owned portfolio appears contradictory when juxtaposed with recent consolidation efforts.
SOE Restructuring: A Parallel Strategy
Late last year, President Muizzu initiated sweeping reforms to reduce redundancy among SOEs. Notable examples include the planned merger of the Regional Airports Company Limited (RACL) with Maldives Airports Company Limited (MACL) and the absorption of Fahi Dhiriulhun Corporation (FDC) into Housing Development Corporation (HDC). These decisions were aimed at improving efficiency, leveraging scale, and aligning organisational mandates.
Similarly, companies like the Maldives Integrated Tourism Development Corporation (MITDC) and Agro National Corporation were dissolved, with their functions redistributed to entities deemed better equipped to manage them. These actions reflected a clear drive toward cost savings and tighter oversight—principles that seem at odds with the current wave of new SOE creation.
Reversals and Restarts: The Case of AgroNat
In a noteworthy policy reversal, the government reinstated AgroNat Company as a functioning SOE under the Ministry of Agriculture, after initially deciding to dissolve it. The company’s revised mandate now centres on food security, support for small-scale farmers, and the revival of agri-boats to facilitate produce distribution.
While AgroNat’s renewed mission aligns with social development goals, its return also reopens questions about accountability. The company previously faced allegations of financial mismanagement, and its past underperformance casts doubt on whether this reboot will yield better results or simply burden the public budget further.
Essential SOEs, Underwhelming Returns
Even the most critical SOEs are struggling to demonstrate financial viability. Maldives Transport and Contracting Company (MTCC)—tasked with vital national infrastructure and transport work—reported a sharp drop in revenue and profits for 2024. Despite handling 182 projects, MTCC’s net profit fell by 44% year-on-year, highlighting inefficiencies and cost overruns.
This disconnect between high operational load and low financial return exposes a larger issue: the assumption that operational relevance guarantees economic sustainability. For policy makers and business stakeholders alike, MTCC’s performance should be a wake-up call about the limitations of state-led project execution without commercial discipline.
Mandate Creep and Corruption Risks
The lines between service delivery and commercial overreach are increasingly blurred in certain SOEs. Such a concerning example is the Police Cooperative Society (POLCO) and Sifainge Co-operative (SIFCO), which were originally intended to support the welfare of the police and the army. However, they have since expanded into large-scale housing projects—operating with monopolistic tendencies, drawing heavy criticism for market distortion and alleged corruption.
Audit reports have flagged serious irregularities in such initiatives, including costs exceeding market rates, frequent project changes, and favouritism in contract allocation. This trend of “mandate creep” not only undermines public trust but also exposes systemic vulnerabilities in the governance of SOEs.
A Call for Reassessment
While the establishment of SOEs may be rooted in good intentions—economic development, service delivery, innovation—their proliferation, uneven performance, and risk of mismanagement raise legitimate concerns. At a time when the Maldives faces fiscal pressures and calls for private sector empowerment, the continued expansion of the state enterprise ecosystem deserves scrutiny.
The government must now answer a critical question: Are we building strategic assets, or are we nurturing long-term liabilities?
SOEs will remain a fixture in the Maldivian economy. But to truly serve the nation, they must be fewer, sharper in mandate, and held to higher performance standards. For business owners and policymakers navigating a complex economic environment, this is more than an administrative issue—it is a matter of national competitiveness and fiscal responsibility.
