This is not enough: The most crucial task remains

If we look at it through the lens of a football match, as the first half of this government nears its end, they are trailing by a score of seven to one. Consequently, the team’s coach, President Dr. Mohamed Muizzu, has made significant changes to the lineup. In a sudden move, he sidelined 10 players, downsized the team, and brought four new players onto the field. The question is: how effective is this change?

Following the resounding "No" voiced by the citizens in the most recent major elections, changing the cabinet became a necessary step. This is how things are done in modern democracies. However, when those countries implement such changes, the priority is to present a stronger team to the people than before. The goal is to regain public trust and deliver results. Does the change brought by President Muizzu reflect that vision? Or is it a step backward?

To answer those questions, I, personally, must say that yesterday's cabinet reshuffle does not yet show a strengthening of the government. Instead, it appears weakened. This is because among the 10 who resigned, there were highly capable individuals. Meanwhile, among those who did not resign, there are individuals who have caused—and continue to cause—significant damage to the government. Furthermore, among the four entirely new faces brought into the cabinet, some do not look very promising based on their past performance.

While some senior government officials and the ruling People’s National Congress (PNC) claim that a referendum or "yes/no" vote is not a measure of public support for the government, that argument is hard to accept. In civilized nations, the results of such votes are used specifically to gauge whether the public supports the government or not. Prime Ministers in countries like the UK have even resigned after losing such votes.

Despite a powerful campaign utilizing vast resources, approximately 70 percent of the people said "No" to the incumbent government in the recent vote. From that point, the President assured that he accepted the results and would bring about reformative changes. Along with ordering the resignation and dismissal of some company heads, he has now brought major changes to the cabinet. However, one of the most vital changes has yet to be made.

Reform the companies that have become nests of theft!

In every administration, Maldivian state-owned companies have been nests for theft. Their heads are often individuals who do not hesitate to engage in blatant corruption and take undue advantage day and night. The result is the current dire state of state-owned enterprises (SOEs) in the Maldives. If one truly wishes well for the nation, this is something that must be reformed.

More than 30 state-owned companies have been operating in the Maldives for a long time. Among them, 22 are 100 percent state-owned. Over this long period, only a handful of these companies—countable on one hand—have produced a profit. Approximately 90 percent of these companies run at a loss, having engaged in every practice they should have avoided.

The constant loss-making nature of Maldivian SOEs is not just a matter of mismanagement. It is the result of deep-seated political, economic, and institutional structural issues. In every administration, many companies are used by government leaders and members of parliament from the ruling party for theft and illicit gain. It doesn't matter if it's MDP, PPM, or PNC; they are all the same. They devour from wherever they can.

The system of running these companies, which are supposed to be the backbone of the country's economy, has failed, becoming the largest burden on the state budget. Instead of generating profit, these entities—created for that very purpose—are losing billions. While the management system has failed, the loudest argument in the debate for a solution is privatization.

Take Dhiraagu, for example. Although the Maldivian government holds shares, it does not hold the majority. This means the government cannot force the company to do whatever it wants. As a result, the company is run under competent Maldivian management, generating huge profits and advancing significantly. It adopts all the positive modern changes. There are no worries about the leakage of citizens' communication data. Almost everything is handled professionally.

However, imagine if the control of such a company were in the hands of the Maldivian government. The heads of the company would undoubtedly be activists. For every election, they would surely distribute jobs, make data packages free, and do numerous things detrimental to the business just to secure votes. They might even try to install antennas on every single island. The result would be a loss of public trust in that communication service.

Let’s look at another example. In other administrations, it was Fenaka. In this government, the list includes Maldives Airports Company Limited (MACL), which runs the main airport. Even though it is a 100 percent state-owned company, previous governments did not exert such influence over MACL; it was run professionally. However, today’s situation and the allegations being made are different. There are numerous allegations that job distribution for political purposes has increased immensely within that company. When a Right to Information request was filed to find out the number of newly hired employees under legal authority, the information was denied. The lists that have since leaked show things that—if authentic—are enough to bring one to tears.

The allegations aren't limited to job distribution for political gain and illicit activities. This company, created to develop and run airports, is doing many things outside its original mandate. They are taking on contracts to build outdoor gyms in islands. Not stopping there, the company responsible for running the airport has started reclaiming land by taking out massive loans. The list goes on.

This is not to defend giving the airport to India’s GMR. However, if a Maldivian company of that caliber is being destroyed by Maldivians, isn't that even worse?

Looking at Fenaka and MACL alone, it is clear that companies must be saved from the grip of politicians. There is a good model for this: the government selling the majority stake in most companies, or privatization.

Many advocate for privatization as the way out of this situation. Its greatest benefit is management efficiency. Since companies with significant private ownership are run for profit, they minimize waste and utilize resources to the fullest. Global experience shows that productivity increases many times over with privatization.

A second benefit is the reduction of the state's financial burden. By privatizing a loss-making company, the current expenditure from the state budget stops, reducing pressure on national debt. This creates space for the state to increase spending on vital areas like education and health. Furthermore, competition will improve service quality, paving the way for new technology and foreign investment. Since private companies prioritize customer satisfaction, improved service quality is a certainty.

Another factor is the requirement to regularly publish company accounts. Simultaneously, company heads must be accountable to shareholders. They wouldn't be able to stay in power simply by pleasing the President, as is the case now. The result would be a hesitation to do things that would harm the company.

A Maldivian economist who contributed to this report stated that the biggest benefit of increasing private stakes in a company is the increased priority on minimizing financial loss and generating profit. He noted that special focus would be given to cost-cutting and profit-enhancing measures. Decisions would be made faster and based on market trends rather than political gain.

"This change will bring new experiences and improve management practices. Dependence on the government will decrease. SOEs with some non-government shares, like Dhiraagu, BML, and MWSC, are on average producing better results than fully state-owned SOEs, which is proof of this," the economist said, requesting anonymity due to his position.

While privatization has benefits, it also carries risks. The biggest fear is the rising cost of basic services. Since private companies focus on profit, the increased cost of electricity, water, and transport would be a hardship for Maldivians. Therefore, there will be companies where the government cannot relinquish control entirely. However, the government should maintain that control in a business-like manner that avoids losses—not in a way where a President decides to cap all electricity bills at MVR 400.

Financial experts say that full privatization might not be the best solution for a small country like the Maldives. What is needed is a "mixed" approach. First, professional individuals must be appointed to the boards of state companies to save them from political influence. Selling minority shares while maintaining state control and running infrastructure projects under Public-Private Partnerships (PPP) are also viable options.

The most important thing in this is establishing a strong regulatory system—changing the system so that a President cannot simply do whatever comes to mind. There must be a system to control prices and service quality. There must be a robust system to stop theft and harmful practices—not an Anti-Corruption Commission like the one currently in the Maldives.

Many companies created to generate income for the state have today become a massive burden. Within them, blatant theft and illicit gains are carried out under every administration. This is a deep-rooted problem of policy and management systems. One solution is privatization. If the political influence reaching into state companies is not stopped today, tomorrow we will be forced to watch the entire economy crumble and auction off state assets at bargain prices.

Therefore, if the President is to bring reformative changes in accordance with “the heartbeat of the people," the way these companies are run needs a 180-degree reversal. Those who steal and take undue advantage must be dismissed and punished. The government must relinquish controlling stakes so that political influence cannot reach the companies. Likewise, capable people must be put in charge instead of political loyalists. Such changes must be brought quickly—to govern according to the aspirations of the people.