For a substantial amount of time, investors have had to pay vast sums of money as various fees to secure islands for resort development. Part of these fees include the Corporate Social Responsibility (CSR) fees, which until recently, the investors paid to whoever the Tourism Ministry instructs the funds to be paid to. As a result, the sums paid as CSR during the former administration remain unknown, along with what became of it. However, the Tourism Ministry has adopted new changes whereby investors have to pay CSR funds directly to Maldives Inland Revenue Authority (MIRA). The question now remains whether this is a good change of policy.
“CSR funds were deposited into whatever account the then-Minister wanted. The Minister would state which account to deposit money to. There are government companies listen under CSR accounts. But we don’t know what became of the money,” a resort developer and investor stated, asking to remain anonymous.
When it comes to CSR funds, it is worth asking why CSR funds are collected, and how they were collected in the past. CSR funds have been, till date, collected to increase the construction period of resorts. If, for any reason, a resort developer wishes to increase the amount of time between the lease and resort opening, they are required to pay US$ 15,000 for the first two years, and US$ 20,000 for every subsequent month.
During the former administration, close to 50 resorts were opened for business in the Maldives, with construction work still ongoing for a number of resorts at present. It is no surprise that all these projects would have had to pay CSR funds to the government. The pressing question is: how much funds did the government earn from the investors for these projects? How much from the CSR funds actually reached the public or benefited the people?
The total sum paid as CSR funds to the Tourism Ministry in the past five years is not clear, although audits are ongoing. In fact, there has been only one mention of a project from the CSR funds – the castle built on Aarah. According to the former Defense Minister and Maduvvaree Constituency’s MP Adam Shareef Umar, the castle-like structure was built on Aarah under a CSR initiative. AVAS has learnt that this structure was built by a Singaporean businessman.
“The way CSR funds have been collected have tarnished our reputation. There are no actual policies for investors to pay CSR funds. You have to pay to whoever the minister wishes,” a businessman said, asking to remain anonymous., admitting he has paid millions to the government as CSR funds but has no clue what became of it.
Tourism Minister Ali Waheed has announced that changes have been brought to the CSR policy at the ministry, stating that the former method of paying CSR funds paved way for corruption to a great deal.
“There are records that show that CSR funds have been deposited to MIFCO, STO, PSM and other companies. The records also show that there have been demands made to withdraw these funds from the company accounts once deposits were made. In many cases, the amounts do not tally. This will become clear once last year’s audit report is published,” he added.
Minister Ali Waheed further said that this new policy change will put an end to corruption from within the ministry.
“The ministers will no longer have a right to demand for CSR funds. We have closed all ways for such funds to enter the ministry,” he said.
Investors praise the new policy!
With the new CSR policy, the former practice of CSR fund collection will no longer be in effect. The new policy includes certain bands through which CSR funds can be collected. Under the new policy, CSR funds will be paid monthly, according to zones. As such, Zone Three includes K, AA, ADh atoll, while Zone Two includes N, R, B, and LH atoll. Zone Four includes V, M, F, Dh, Th, and L atoll while Zone Five comprises of GA, and GDh atoll. Zone One and Six include HA, HDh, Sh, and S atoll.
Under the new CSR fund policy, the resorts further away from Male’ will have to pay a smaller sum as CSR funds. According to investors, this is a good and welcome change.
Owner of Lets Go, Mohamed Riyaz noted that this new change minimizes room for corruption.
“Investors don’t need to bow down in front of the minister anymore, which was the case before. We don’t know what happened to the CSR funds we paid before, so this is a very good change,” he said.
“It is the government’s duty to ensure the CSR funds my company pays directly benefits the public. A lot of people assume that resort developers don’t do anything. That is not the case. There are numerous processes in resort development projects. There is a lot to consider, and we are not talking about just the CSR funds. We investors have to spend a lot. That is why it is crucial that we know the funds we give are allocated wisely,” an investor said, asking to remain anonymous.
CSR Fund amounts should be disclosed
Mohamed Ali Janah, who has invested in resort projects in Huvadhu Atoll noted that this new policy change will have positive effects on investments.
“This is a very good change. Investors no longer need to chase after the ministry. We know that CSR funds need to be paid to MIRA now. This increases investor confidence, and the bands in this policy provide ease to the investors,” he said.
Janah added that the policy needs to be transparent and disclose the amounts paid as CSR funds.
“I paid MVR 20 million to the government as CSR funds for my projects in Huvadhu Atoll, but who knows this? No one does. But there are people who criticize businessmen, that we don’t do anything for the atoll once we lease islands for development. I would have gladly distributed the CSR funds I paid to the government to the island councils instead. That would surely count as something done for the atoll, wouldn’t it?” Janah said.
Janah added that once the CSR funds are disclosed the public will have a better idea of the work the investors do.
“I believe the lists should be publicized, stating who has paid how much as CSR funds,” Janah said.
According to the Tourism Minister, the CSR funds collected under the new policy will be deposited to the Tourism Trust Fund.
“There have been cases in the past where islands were leased and then procedures were delayed. This policy will ease the investor of the US$ 15,000 burden. It is disheartening to read about little things that remain undone in the islands. This new change will bring a solution to that. Our hope is that the tourist trust fund will provide ease to the public,” Minister Ali Waheed said.
While this new policy is a good change, the government needs to ensure that the CSR funds reach the public and is used for the betterment of the society. One thing remains clear though - this new policy change has closed ways to corruption.