Governor rebuts claims of USD 500 ‘too expensive’ for exchange

The Governor of Maldives Ahmed Munavvar has rebutted claims by tourism industry stakeholders stating resorts did not generate enough revenue sufficient to exchange currency at a rate of USD 500 per tourist.

The Regulation on Foreign Currency enacted by the Maldives Monetary Authority (MMA) and put to effect last month states that tourist resorts are mandated to exchange foreign currency at a rate of USD 500 per tourist from the revenue generated from the total monthly tourist arrival, while guesthouses are mandated to exchange at a rate of USD 25 per tourist.

Tourist industry stakeholders however, have said the regulation was formulated without the input and recommendations made by relevant entities, adding the rates stipulated for tourist resorts and guesthouses were too high.

MMA on Tuesday evening publicized a bill aimed at strengthening the recently enacted regulation, which set the same rates for exchange as that of the regulation. However, though the regulation stated that tourist hotels with over 50 rooms in local islands must exchange at a rate of USD 500 per tourist, the rate has been dropped to USD 25 per tourist.

At the press briefing held on Wednesday to disseminate information on the new bill, the Governor said that the average daily rate (ADR) of tourist rooms was not factored when setting the currency exchange rates. Average daily rate refers to the average income earned per occupied room in a tourist or hospitality property over a specific period.

Munavvar also noted that the bill states that tourist properties are required to exchange the monthly revenue based on total tourist arrivals before the 28^th day of the third month from the review month.

“Within four or three months, 500 into number of people” Munavvar pointed out to the formula used to calculate the exchange rate.

“This means we are not looking into a single month, but they are required to exchange the currency based on the arrivals for three or four months.”

He also pointed out, in light of available statistics and research, that tourists would on average spend more than USD 500 per head.

“On average guests will spend between USD 1,000 and 1,200 or more than that. These numbers are not crunched by us, but provided by previous surveys which is available for perusal,” Munavvar added.

The governor also said that the bill’s aim was not to amend the regulation, but to enforce the powers stipulated in the regulation. Munavvar further hinted on the possibility of relaxing some of the measures set out in the bill if the economic conditions improve after the bill’s enactment.

“But the reality is that this is a much-needed step to overcome the current fiscal challenges the Maldives as well as servicing the debts inherited by the financial sector in the next two to three years,” he explained.

Though measures will be relaxed in prospective future, Munavvar reiterated no such leniencies have been planned for now.

He also highlighted that stakeholders have the chance to provide feedback to the bill until Sunday next week, and promised he would review them.

Tourism industry stakeholders have criticized that the regulation did not factor in the expenses incurred by hospitality properties in foreign currencies and the average duration of stay.

The bill proposed by the central bank makes an exception of guests whose stay is no longer than 24 hours and tourists aged two years and below, as individuals who will not be counted among total arrivals per month to tourist properties.

Earlier, Champa Central Hotel which has been operating non-stop for nearly 10 years closed down on November 14^th citing it did not generate sufficient revenue for it exchange money at the mandated rate.