imthinking

Another Billion Dollar Phantom Investment to Maldives

2010-04-02T21:39:00.001-07:00

I hate to do this again. But I have to remind my President and fellow countrymen that a billion is an obscenely large number. I honestly can’t understand how we have become a country that’s so excessively engaged in self deceit.

This time around last year our State Minister for FDI was talking about how President’s trip to Italy was going to bring in USD 1 billion worth of investment to this country. Now the president himself seems to be onboard the billion dollar bandwagon.

Mr. President. Sir, your advisors are deceiving you. Any talk of a billion dollar investments coming into Maldives is simply NOT true. It’s nothing but a blatant bald-faced lie! According to the guys at UNCTAD during the decade 1990-2000 we only had an average annual inward FDI inflow of USD 9 million. The figure has never exceeded USD 15 million since.

Sir, I don’t know why your highly qualified advisors so miserably fail when it comes to having an appreciation of the simple arithmetics needed to figure out that an economy that’s entire value hovers around only a billion dollars cannot possibly attract billions of dollars of FDI. Sir, this is commonsense - no 300 feet-tall Sierra redwood is ever going to grow on our tiny islands; no 100 ton blue whale is ever going to be seen swimming in our lagoons; no Carlos Slim Helú is ever going to be born in Maldives. Period.

Sir, I know you like to dream big. There’s nothing wrong with that. In fact I as an average citizen of your country admire that quality in my president. But I honestly can’t help being wary of all this frivolous talk about billion dollar phantom investments.

Some thoughts on rebuilding the broken Maldives

2010-03-26T22:16:00.001-07:00

This country is in serious trouble. It’s a broken nation, to say the least. Economist, Paul Collier, in his TED talk “New Rules for rebuilding a broken nation” offers some serious advice that the leader of a broken nation like the Maldives could use.

Paul Collier makes it very easy to see what our small country under President Nasheed is doing wrong.

Firstly, we prioritized politics instead of security and economics. Our experience over the past 15 months have shown that an election doesn’t produce an “accountable and a legitimate government”. What it produced for us was a rather murky win for MDP coalition and a humiliating loss for DRP. The result is disastrous. An unreconciled pugnacious DRP is on the verge of taking this country to the brink of a civil war. Estranged coalition partners are acrimoniously bickering over MDP’s betrayal to them. So, from the standpoint of most political parties this has become a bitter zero-sum game - we can only go up if we bring those guys down!

Secondly, our government, both during Gayoom’s last few years and now, is focused on seizing ad hoc short-term opportunities and do-good projects with the help of unprincipled politicians (they are ubiquitous - you can’t stretch a leg without poking one in the ass ;-) . The result is an unsustainably large fiscal deficit and overall bad economic policy. Instead of focusing on front-loading economic reforms and creating an inclusion agenda on the political front our meager resources are being spent on doing-nothing commissions and frivolous political posts to fight the ghosts of Gayoom era.

Thirdly, Nasheed’s Government seems to be doing very little to address what Paul Collier calls “the three critical things” in a post-conflict situation: creating jobs, improvement of basic services especially health and providing a clean government. Government did ‘create’ jobs, in fact hundreds of jobs - not for the ordinary men and women but as rewards for activists and political cronies. Health services? Well, I only hear from my wife’s doctor friends that they are using normal thread to tie the umbilical cords of newborns at IGMH. As for the issue of ‘clean government’ my dubiety is fuelled by what a highly influential friend of mine told me a few months ago - ‘mi fas aharu nimey iru aharumen dhemigannaanan’. With an attitude like that among senior officials I don’t see our government going too far with creating a ‘clean government’.

Growing Githeyomirus and Building Flats

2010-03-22T22:40:00.000-07:00

Growing githeyoirus? Here’s how you do it: put some soil into a pot, add a bit of cow dung, plant a few seeds and just water the pot everyday to see lots of red fiery ‘githeyomirus’ growing on your little plant in just under three months.

I’ve always thought growing githeyomirus was as simple as that; but that was only until I decided to give it a try. I planted seeds, watered the little plants, added not just cow dung but lots of different fertilizers. But the plants simply refused to grow. Most plants withered and died before they grew six inches tall.

What went wrong? Well, being the typical jack-of-all-trade Maldivian that I am, I just thought I knew everything there is to know about growing githeyomirus . What most of our type i.e., the jack-of-all-trade Maldivians don’t often realize is that most things in life are easier said than done.

The problem with us is this: we Maldivians know - we simply know too much about too many things.

Now, building flats, anyone?

Upon taking the oath of office Nasheed must have sought the advice of one of his brilliant jack-of-all-trade advisors on how to build flats in our islands. I bet the answer would have been very much like this: Sir, here’s how you do it - 1. Get finance. 2. Get an architect to design the flats. 3. Get a contractor to build. It’s so simple. Play House Disney’s Oso the Special Agent stuffed bear’s 3 special steps even seem more complicated than this. ;-)

22nd December 2008: one of President Nasheed’s I-know-how-to-build-flats ministers, brimming with confidence, went on TV to say that work on 5,000 flats would begin early 2009 and discussions with Chinese Government on the construction of 25,000 houses are progressing.

Fifteen months have passed since the announcement. Any hope I had of becoming a githeyomirus farmer has long dissipated. The 10,000 flats and the 25,000 houses have long been buried along with so many other phantom projects pitched continuously at our unsuspecting. President Nasheed, in the meantime, earned the title ‘flat dhonbe’ from his people who continue to live their miserable lives harvesting rainwater in mosquito-infested polyethylene tanks and defecating on public beaches and ‘four-gear’ latrines.

Maldives’ Freakonomics: Lesson One - ‘Hakuru’ Business

2010-03-16T02:02:00.000-07:00

After I wrote a blog post on how to make loads of money in the Maldives, someone asked me if the ‘hakuru’ pushers really do make that kind of money and how and why are people lured into the business.

Well, the IRR of over 7000% and NPV of Rf44million was no joke. And a gross annual income of Rf8million isn’t unrealistic if you start with a seed capital of, say, Rf100,000. Just think about this - for someone to have Rf5 million cash on him at any given point in time his annual income has to be, even by the most modest reckoning, at least Rf50million. So, my estimates were in fact very prudent. The numbers were worked out based on very prudent and realistic assumptions.

Now, for the question – do all of them make that kind of money? Well, ‘Hakuru’ business is no different from any other capitalist enterprise. So, to make really big bucks from it you have to be at the top of the pyramid. The average foot soldier ‘partey’ probably makes very little money - perhaps just enough for his daily fix.
Then, why are so many people in the business? That’s because our country offers a very conducive environment for ‘Hakuru’ businesses to thrive. To many young people ‘hakuru’ offers not only an escape but a shortcut to great wealth and power with relatively little risk.

Ok, they are not making money. So, what’s their motivation?

Here’s a profile of two ‘partey’ kids I know. Makmoor and Maumoor, both in their late teens, are two out of eight siblings. Their mother, father, 8 siblings and a few other relatives lived all their life in two match box sized slum-like rooms located right in the heart of ‘Bah’lha’ territory in Male. The family, forced to live mostly on the generosity of their distant relatives ever since their father died of heart failure a few years ago, have been trying to eke out their existence any way they could. Both kids dropped out of school before they reached grade 8. So, the best job they thought they had access to was provided by highly visible, incredibly lucrative neighbourhood ‘Bah’lha gang’. The kids grew up marvelling at the glory and power of Bah’lha gang’s boss ‘Addey’ and his Lexus sports car. Addey has everything they could ever dream of – he’s cool; he has money, power, sex and glory! He is their role model. They know all too well that if they are to make it to the top someday money, power, sex and glory will all be theirs too. Risks? No worries. Being convicted 7 times in Maldives does absolutely no harm to the glory and power of a ‘boss’.

The ‘partey’ kids aren’t very different from the rest of the kids on the streets of Male. The typical twenty-something GRO at Sonevafushi would probably be dreaming of becoming a Sonu Shivdesani one day or making it all the way to the top. Likewise, Makmoor and Maumoor, having grown up in abject poverty and being denuded of whatever little moral values engrained in them – thanks to their preadolescent exposure to ‘hakuru’ fuelled highs - are only trying to climb their way to the top of the capitalist enterprise they know.

How to make loads of money in the Maldives

2010-03-10T20:14:00.000-08:00

Today, I have a little research in freakonomics. After a friend of mine recently told me how he could quadruple Rf 3,000 in 2 days I became a little curious on the profitability of certain businesses in Maldives. It’s no surprise. If you are looking for a get-rich-quick business here are the two most promising business ideas.

Number 1: Start a ‘Hakuru’ Business

Initial Investment: Rf 100,000 (you can start with as little as Rf1000)

Internal Rate of Return: 7014%; Net Present Value: 44,482,281
(Based on a 5 year cash flow - 50% annual growth of sales, 10% discount rate)

Risk Profile: Low to Moderate i.e. if you play your cards right.

Qualification: Any unemployed, half-literate, wannabe rags-to-riches can do this.
Entrepreneurial skills: Ability to form and control a ‘gang’. A few rules apply if you want to become filthy rich in this. Remember Chika? A few tips you could use are: look good, be smart, tough, ruthless and shrewd, but not tempting to arrest. And know how to motivate the foot soldier ‘parteys’ below you and manipulate your political contacts.

Expenses
Cost of Goods 600000
Partey distribution network cost 180000
Cost of 'partey' fighters, weapons & protection money 420000
Total Annual Variable Costs 1200000

Income
Drug sales 7,200,000
extortion & mercenary income from politicians 960,000
Gross Annual Income (1st Yr) 8,160,000

Number 2: Become a ‘Membaru’

Initial Investment: Rf 500,000

Internal Rate of Return: 196%; Net Present Value: Rf 4,071,429
(Based on a 5 year cash flow; 10% discount rate)

Qualification: 5th grade education would suffice.

Risk Profile: Totally Risk Free. Once you get there you are invincible. Infallible. You get a Carte blanche for everything. You can sell votes, party hop and do anything you want.

Entrepreneurial skills: Must be an inherently talented rabble-rouser, a born firebrand. Must be able to stand on podiums of political rallies and shout out a non-stop 30 minute miscellany of the most unimaginably nonsensical rhetoric, absolutely devoid of any intelligence.

Expenses
Office rental & staffing costs 180000
Beys-sitee, 'gifts' to constituency 120000
Total Expenses 300000

Income
“Membaru” salary 780,000
Other income (selling votes, wheeling and dealing) 480,000
Gross Annual Income 1,260,000

Amphibious mini-city and floating golf course: Is anyone excited?

2010-03-06T22:34:00.000-08:00

Surprise, surprise. There’s no election on the horizon. But another megaproject is here with a big bang. Maldives is going to get the world’s first star-shaped amphibious mini-city with a massive convention centre hidden under lush green-roof terraces, complete with interior pools and beaches!

With the megaproject the Dutch are back. But this time it’s not Boskalis.

The last time we used a Dutch company’s name was in connection with the now-forgotten Gulhifalhu Global Business Park (GGBP). Three hundred thousand, minus one person (Idham Muizzu knows a thing or two about due diligence) were all duped into believing that GGBP was going to be ‘developed’ by Boskalis when our government was in fact getting into an agreement with a very ‘British’ Sivarajah Manivannan’s Capital Investment & Finance Ltd of the United Kingdom. Yes, United Kingdom – of course!

Then came the “Dubai World’s” phase II of Hulhumalé and the incredibly amazing Moonbay Marina. The fool’s paradise Moonbay marina didn’t prove to be a good sell. Perhaps the Dhivehi taste for megaprojects were a little too cloyed by countless empty promises on phantom projects like the 2003 Presidential Elections’ Hulhumale Bridge and the USD 300million transshipment port government decided to ‘build’ in Ihavandhippolhu in the run up to the 2004 parliamentary elections. Gayoom lost the 2008 Presidential elections and poor Moonbay continued her lonesome and miserable existence in youtube.

The time of mega-projects didn’t end with Gayoom. Within a few months into his presidency Nasheed too learnt the ropes of the mega-project trade.

November 2009: Government announced a USD 200 million wind farm project to produce clean electricity for Male’, Hulhule’ and a number of tourist resorts. For almost a month state media went on a frenzy about how GE was coming to build the latest generation wind turbines and lay the submarine electricity cables in Maldives. Yawn, another big yawn. I wish someone would explain to me what Falcon Energy and WES, GE and Government of Maldives are each supposed to do in this project.

November 2009 was indeed the month of mega-projects for Maldives. Government announced another project with GMR Infrastructure to develop a trendsetting international airport at Hanimaadhoo together with resorts with a bed capacity of 6000!

That wasn’t all. Government signed an MoU with another Indian company, Suzlon to develop another wind farm valued at USD40million in Addu.
Fast forward four months. Suzlon’s windfarm and GMR’s airport are probably collecting dust somewhere in a dark corner of a Government office. And it doesn’t look like Gaafaru wind farm is getting out of youtube to see the day light anytime soon.

Mega-projects in the Maldives have always been the ultimate weapon in the arsenal of our mighty politicians and their deep-pocketed resort bigwigs when they prepare for their ritual once-in-every-five-year onslaught on our unsuspecting people. It looks like Gaafaru windfarm, Hanimaadhoo airport and Addu Windfarm are all destined to the fate of Ihavandhippolhu transhipment port, Moonbay Marina and the Hulhumale bridge.

Now, don’t get me wrong. I’m not against mega-projects. In fact I think today’s mega-projects are my great-great-granddaughter’s only hope to stay above water if she is to live in the middle of the Indian ocean. I wish she would be there to marvel at Jaguar Woods sink a 50-foot birdie putt on the last hole to take the Maldives Open Championship held at Dutch Docklands floating golf resort, 100 years after I’m gone. ;-)

Islam, the army and everything else is costly in Maldives. Here’s why

2010-03-03T18:23:00.000-08:00

Islam is a costly affair. So is the army. And so are the other institutions. Everything in this country is costly. Expensive. Obscenely expensive, to say the least.

Under Gayoom we had a huge problem: almost one in every five adult was a civil servant; we never bothered to pay the real cost of our electricity, health care, water etc; five out every hundred Rufiyaa we earned went to support our military (I’ve tried but haven’t figured out why we continue to do so). And with no taxation the meagre Government revenue was far too inadequate to finance our expenses. So, we found the easy way. We borrowed. Every time we had a shortfall we simply borrowed our way out of it without ever attempting to find a permanent cure to our prolonged illness.

We lived beyond our means back then. And 15 months after Nasheed was sworn in amidst much euphoria of change, we are still living way beyond our means. Our government was and still is probably the biggest spender in the world in relation to the size of the economy.

Well, the cost of providing services and maintaining the bureaucracy of a government to 300 thousand people dispersed on 195 tiny islands not much bigger than football pitches is an innately costly affair. There’s absolutely no doubt about that.

But here’s a question we need to think about: can a country the size and nature of Maldives run a government with less money? Yes, indeed. If other microstates like Mauritius, Cape Verde and Aruba are able to run with government expenditures of only around a third of their GDP, there’s little reason to believe we can’t do the same.

Bringing the much-needed structural changes was and still is the key issue. But sadly, these changes were and still are simply delayed because they are too painful to the people at the helm of our affairs.

Disproportionately large public institutions were created and sustained, largely with borrowed money, for the political expediency of a few individuals. State and deputy ministers, political appointees, brigadier generals and so forth are created not based on any real need but simply to camouflage trickery.

It’s easy to blame it on the 300 thousand people and 195 tiny islands. But the fact of the matter is this: no other microstate maintains 77parliamentarians, 54 state ministers, 75 deputy ministers, a countless number of other political appointees, over 29 thousand civil servants and thousands of military personnel –all paid through the tax payer’s nose. The world’s richest country, a microstate, incidentally, is run by a prime minister, his deputy, 3 ministers and 5 alternate ministers!

Army: another costly affair in the Maldives!

2010-02-24T08:06:00.000-08:00

Here’s another white elephant that’s going to get your knickers in a twist.

5 to 8 laari out of every rufiyaa we earn is spent on our Defence Ministry. It’s little wonder some estimates place the Maldives next only to Israel in terms of military spending as a percentage of GDP.

Its been over a year since Gayoom’s government, often alleged by opponents to be a police state, was voted out in the first multiparty elections that catapulted Nasheed, the most vociferous advocate of human rights and democracy this country ever produced, to the country’s highest office.

I for one believed the end of ‘the police state’ and heralding of democracy would inevitably ease military spending freeing up resources for the more urgent priorities.

My optimism is short-lived. The first democratically elected Government of Maldives spent a staggering Rf 613million, up Rf41million from Gayoom’s final year, during its first year. And over the medium term the trend is all set to continue unabated.

On Wikipedia’s list of countries by military expenditure as a percentage of GDP, the Maldives placed on the 15th seems to be somewhat of an oddity. No one would have raised an eyebrow if the Maldives is an oil rich Arab state or we had a history of armed conflicts.

Now, for the biggest and the most controversial question: does a country the size and nature of Maldives need to spend such vast sums of money on maintaining this disproportionately large army to thwart a make-believe threat?

The world’s richest country Liechtenstein, with a per capita income a whopping 30 times more than ours, has no armed forces. Mauritius with a population four times that of the Maldives and a per capita income of over USD 12thousand doesn’t have one either. Andorra, Costa Rica, Dominica, Marshall islands, Monaco, Panama, St Kitts and Nevis, St. Lucia, Samoa, Solomon islands, Tuvalu, Vanuatu are all independent states that, to my reckoning, aren’t very different from the Maldives that are managing the affairs of their statehood with no standing army.

Finally, here’s the saddest part of the story. Our finance minister embroiled in a frivolous conspiracy theory about our CSC seems to be totally oblivious to this colossal white elephant we are keeping mostly to attend to rather mundane affairs of statehood such as, ahem, keeping rodent infestations at bay. ;-)

Islam: A costly affair in the Maldives

2010-02-21T18:11:00.000-08:00

Islamic Affairs Ministry has a budget of Rf 211million – that’s twice as much as we are spending on tourism, information and arts and a whopping 14 times more than what we are spending on economic development!

How on earth is the Islamic Ministry spending all the money? Rf 160million on recurrent expenditures and 51million on capital expenditure, says the Ministry’s budget.

The Public Sector Investment Programme for 2010 shows Government plans spend Rf50million to build mosques in some 36 different locations in the country. Here’s an example of some islands that are going to get brand new mosques in 2010.

The 700 odd residents of Dh. Badidhoo are getting a mosque at a cost of Rf1.2million.

R. Fainu, home to some 300 odd people are getting a mosque valued at Rf1.7million.

R. Dhuvaafaru, home to around 2000 people is getting 2 mosques – one that costs Rf0.58million and another at Rf 4.4 million.

Who prays in these mosques? Men, to be more precise, men too old to travel to resorts or Male for work. How about women? They pray at home.

Now, the question of cost. I know how easily I could be labelled as ‘an atheist, gay, Jewish, Christian missionary’ for saying this. But lets think about the Fainu mosque case: building a mosque at a cost of Rf1.7 million in Fainu is like giving Rf30,000 to every adult male in the island to pray. It simply defies all my logic. I simply cannot understand the rationale of our policy makers to ‘invest’ Rf 50million of mostly borrowed money to build fancy mosques in small island communities the harsh demographic and geographical realities of which often compel its residents to travel to a neighbouring island for the even most common tablet of painkillers.

I’ve always been told Prophet's mosque in Madinah was constructed entirely from date palm – palm tree trunk pillars and palm fronds roof, no minaret and no dome. Islam, as I have understood all my life, is all for virtues like modesty and simplicity.

This got me seriously baffled. Utterly confused. Confused as to the need of a small island community that defecate into holes dug, as-and-when-nature-calls, on public beaches and ‘four-gear’ latrines to pray in a mosque that has a shining dome, a tall minaret and intricate wood carvings of Quranic verses on the walls. It looks like Islam indeed is an expensive affair in this country.

Looking for info on Govt’s websites

2010-02-15T07:34:00.000-08:00

This morning while having a chat with a friend I became a little curious on the corporate entities in which our Government holds shares. After a bit of googling which proved to be all abortive, I thought our Finance Ministry’s website would be the best place to start with. So I typed the all too familiar www.finance.gov.mv on my keyboard and got in to the Ministry’s website.

On the front page are what appear to be a hodgepodge of links to some downloads. The first one entitled “2010 Budget aai behey Circular” took me to an announcement on the lease of properties owned by the Government. The second one with a title “Galolhu Bolha Dhadu 12 No.Fihaara Kuyah Dhinun” as the title says was about leasing a shop lot owned by the Government at Galolhu stadium. This is followed by an umpteen number of unsorted ad-hoc announcements on similar matters I presume are related to providing “the country with a sound macroeconomic framework that leads to sustained growth, with the use of sustainable, non-inflationary fiscal policy” – the noble ‘mission’ of Finance Ministry.

I tried the heading “affiliated institutes” which, for some strange reason known only to the webmaster, listed only MMA, Customs, DIR, BML, HDFC, TEB, PEMEB. HDFC and BML can’t possibly be the only corporate entities in which Government of Maldives has stakes. But then when I saw the last tab titled ‘PEMEB’ – an acronym that incidentally rings a bell of nostalgia of my days at MMA ;-) - I thought I finally found the information I was looking for. Alas, the link is dead!

Then I decided to try my luck with the sitemap to see if that would ease my navigation through the seemingly indomitable labyrinth. Tough luck, again. Its another dead link!

My curiosity with the dead links took me to a tab titled “Minister’s Bureau” that appear to have become extinct perhaps not too long after the last archaeopteryx flew the Earth. Then, I finally noticed the little ‘FEEDBACK’ tab on which I wrote a little note about my problem.

My search eventually took me to a PDF document entitled “Government Offices and Independent Institutions” on the website of the President’s Office. But that was of no help either.

Finally, after almost 45 minutes of googling, navigating through websites of several Government offices and writing small notes that would perhaps only be ‘read’ by BOTs, I’m still left clueless as to how many corporate entities are there in which the Government of my country holds stakes.

Back to blogosphere

2010-02-09T23:03:00.000-08:00

The blogger in me has hibernated for over nine months now. Visitors to this blog and my friends have at times questioned me about my long absence. For those of you out there who want to know, here’s what I have to say.

Firstly, I got busy preparing for my daughter Anna’s arrival.

Secondly, I felt that I was making unnecessary enemies. We have a culture in which all criticisms are taken as personal attacks. Even the slightest criticism could precipitate a totally unwarranted flurry of rabid animosity on you.

Thirdly, I guess I just got sick and tired of crying wolf all the time. Visitors to this blog were accusing me of being too cynical in my outlook.

Then, I thought of taking a break. I thought of just waiting for something positive to happen so that I could write a nice and happy blog post about it. So I went into hibernation at the end of April 2009.

After two months or so I had a look at the major events on the international front to see if there was anything positive I could write about. Many things of course did happen during my absence. But there was nothing that could even remotely be described as positive - H1N1 assumed pandemic status; Ahmedinejad got re-elected in Iran; Air France flight from Rio to Paris crashed killing all 228 people on board; the legendary King of Pop died; and Chinese authorities clamped down on ethnic Uyghurs. :-(

On the domestic front things were going from bad to worse. Amidst the acrimonious political bickering on both sides of the political divide there was little the few ‘good’ elements in the country could do to remedy an economic, social and political situation that had spiralled out of control. And finally, the day my country bloated its Majlis from 48 rabblerousing ‘ikhlastheri’ members to 77, I buried whatever remains of my hope to write a blog post on anything positive.

Fast forward nine months, my little bundle of joy is six months old and it dawned upon me just yesterday that my interest in blogging is still very much alive. So, I decided that it’s time to make a comeback to the blogosphere :-)

Fiscal Discipline - Ali Hashim's predicament

2009-04-29T09:14:00.000-07:00

A finance minister is perhaps the last person to win a popularity contest during a recession. When Alistair Darling proposed his budget it was derided by media as a "fantasy Budget". A writer on the Economist dubbed the budget as “a dishonest piece of pre-election politicking”. Meanwhile, in our small make-believe microcosm of the UK, our finance chief Ali Hashim is faced with a similar predicament. His only consolation is that there are no malicious financial journalists to deride him in his country. The few so-called professional journalists in the country have long given up on any interest to graze in their country’s arid financial landscape - thanks to the greener pastures offered by a highly polarized political landscape.

Ali Hashim’s eye-watering Rf 12.6 billion budget didn’t come as a surprise to me. Big budget numbers have become very much the norm for us. Over the last few years our government has in fact been the biggest spender in the world in relation to the size of the economy. The highest spending governments like that of Cuba, by comparison, have government expenditures at around 80 percent of their GDP.

Is Ali Hashim to be blamed? It appears that he has largely done what he could - trying to trim current and capital expenditures which were largely vestiges of the previous regime. It is the structural problems in the public sector, the disproportionately large civil service, low budget revenues and inadequate tax receipts that engendered the tradition of “fantasy budgets”, in the Maldives. The budget, particularly the revenue projection, as described by G.A Member Jabir, is a “fantasy”. This fantasy, quite ironically is spawned by nothing but the greed and the insatiable demands of powerful political figures in the parliament and government. These are the people that have, for political expediency, shut their eyes to the financial black hole this country is headed to. The Finance Ministers, at least the last three of them, were left with no option but to curry favour to their demands. And much to the amusement of their political masters, each one of these finance ministers soon morphed into someone akin to a Paris-Hilton-inspired wastrel, armed with a credit card.

Another question that begs to be asked is why President Nasheed’s government is unable to break this tradition of “fantasy budgets”? The simple answer to this complicated question is that while most of the powerful figures within the government view any spending cuts as something tantamount to political masochism, the opposition MP’s are crying foul over the budget not “adequately addressing” the concerns of their electorate. Amidst the on-going political bickering and skullduggery ahead of the parliamentary elections, both the Government and opposition MPs seem to be united in humming the tune of spend, baby, spend!

I am no expert in public finance. But I don’t think it takes anything more than commonsense to figure out that if you keep on spending money you don’t have, you are invariably on a path to bankruptcy. Incidentally, a fellow blogger has highlighted some facts and raised interesting questions on the cost of our political reforms. Fiscal restraint and broadening the revenue base remain the only short-run macroeconomic policy variables that are available to Finance Minister Hashim. And given the desperate times, draconian measures are needed to address his Herculean task. A man entrusted with the task to introduce fiscal discipline to a country that has been so much used to there’s-no-tomorrow spending sprees would not be a popular man. The stakes are indeed high for Ali Hashim. The efficacy of his fiscal reforms and his very own survival now hinge on his ability to say no to the pig-headed men and women warming the all too important seats of the government, Majlis and the judiciary. The indications are that Ali Hashim has the nerves to flex his muscles to enforce fiscal discipline. The premature graying, after all, isn’t the only thing that Ali Hashim and Alistair Darling have in common. ;-)

The question of ‘rich pickings’ in the Maldives

2009-04-20T21:15:00.000-07:00

Last week the Economist ran an interesting online debate. The question was on whether the time has come to tax the rich more.

Perhaps owing to a somewhat idiosyncratic resentment towards what the Economist terms “undeserving rich”, like many other thousands of followers of this debate, my immediate knee-jerk reaction, given the dire state of economic conditions and public finances throughout the world, was to be inclined towards Professor Piketty’s arguments that was in favour of taxing the rich more. But as the debate progressed, I found my dogmatic conviction waning in no time. And by the end of the debate I was confused, to say the least.

Arguments on income disparity have been one of the most frequently used populist political tools throughout the world. And the Maldives certainly is no exception. During the political upheaval of the last four years, the phenomenon was particularly widespread. On the one hand Gayoom and his supporters espoused arguments attributing the country’s relatively high per capita income to the government’s policies. At the same time they were quick to vehemently brush aside any criticism by the then opposition MDP, on issues such as the high incidence of poverty and skewed income distribution, as an inevitable price the country had to pay for economic growth and entrepreneurial dynamism.

Much of the criticism during this period was buttressed on the findings of the first VPA of 1998 which put a staggering 45 percent of the population below the poverty line (based on a poverty line of Rf 15 per person per day). However, by the second VPA of 2004, the figure was down to 19 percent. The Gini coefficient – a measure of inequality in income distribution expressed as a ratio between 0-1, with lower values indicating more equal distribution – in the meantime, improved from 0.39 to 0.33 in Male and 0.40 to 0.36 in the atolls during the same period. Contrary to popular belief, this makes our Gini coefficient comparable even to developed countries like the UK and the US.

It has been four years since the second VPA was published. Gayoom’s extravagance and the populist backlash catapulted Mohamed Nasheed to the highest office in the country late last year. It is a little too early to say how President Nasheed’s government’s policies are going to shape, over the long term, the stubbornly perverse affairs of the malefactors of the great resort-wealth and the multifaceted dynamics of the question of inequality. However, with stories like that of the alleged failure of the government to safeguard the interests of 23,000 individual shareholders of MTDC rife, the early indications are that establishing dominion over the all-powerful, party-hopping robber barons are easier said than done.

400 percent increase in pay??!!

2009-04-10T21:17:00.000-07:00

The biggest economies in the world - US, Japan and Europe are in their first simultaneous recession since World War II. In spite of the trillions of dollars Governments around the world have pumped in to prevent their economies from going belly-up, the challenges seem increasingly intractable.

Perhaps oblivious to what is happening in the outside world, for many in this tiny Indian Ocean state of Maldives, their country seems to be totally insulated from the world’s problems. So insulated are we that even the bearers of the beacon of justice in this country found it a very a propitious and fitting moment to demand a whopping 400 percent increase in their pay. Their willful myopia and make-believe state of opulence seem to be completely draping the grim realities of their economy which is literally on the ventilator. I am clueless as to what fuels these frivolous demands. Ignorance? Greed?

Let me quote a story a good friend of mine told me sometime ago about the state of affairs of our small country. With their bellies full, he says, most of the lions, albeit halfheartedly, were forced to retreat into their dens last year. A few more, still, are on the prowl. The hyenas are now going on a rampage over what is left of the carcass. The vultures, waiting for their turn to scrape the bones of what is left of the little meat on the carcass, are ominously circling in the sky. The men and women wielding the sticks to shoo away the beasts have long become nonchalant and blithely shielded their eyes from the events unfolding in front of them.

When is this madness going to stop? I don’t enjoy crying wolf. But what I know for sure is that somebody’s got to do something to tame these wild animals and perhaps put some sense into the thick skulls of the men and women warming the all too important seats of the government, Majlis and the judiciary, if we are to stay afloat. Finance Minister, sir. Ahem, ahem! ;-)

Gulhifalhu Phantom Business Park

2009-04-07T02:21:00.000-07:00

President Nasheed is traveling to UK with an important mission. He is pressing ahead with the new foreign policy thrust area of the Government – ‘economic and commercial relations’ - which Foreign Minister Dr. Shaheed describes as “the top priority of the Maldives”.

Among the important agenda items of President’s trip will be discussions held with a “British company to develop a harbour and build warehouses in Gulhi Falhu”.

Gulhifalhu Global Business Park (GGBP) project was one of three ‘mega-projects’ envisaged by the previous administration. Along with a transshipment port in Ihavandhippolhu and an integrated infrastructure project in phase II of Hulhumalé (moon bay marina??), the Government was banking in on the idea of raking in USD 200 million from the project to the finance its budget in 2008. The euphoria was, as usual, short lived. The ‘mega-project’ soon turned into just another one of those ‘phantom projects’. The resultant revenue shortfall of USD 190 million, which, against a backdrop of dwindling foreign reserves brought about by spiraling import bills owing to the unprecedented surge in oil prices in the international market back then, created intense economic and political pressures that culminated in the fiasco that ended up in the resignation of Gasim, Jaleel and Shougee.

GGBP was initially planned to be developed ‘jointly’ by Boskalis International and Capital Investment & Finance Ltd. Boskalis International, a company that quite literally, epitomizes the Dutch phrase “God created the world, the Dutch created the Netherlands”, was the contractor. Three hundred thousand, of course, minus one person (thank you, Idham) were all duped into believing that GGBP was going to be ‘developed’ by the Boskalis. Meanwhile, the real ‘developer’, alas, was some no-name “Capital Investment & Finance Ltd of the United Kingdom!!!! Due diligence, anyone? Have a look at their website. Anyone who knows a thing or two about due diligence will tell you this company has all the hallmarks of a typical paper company setup by a middleman. The so called “Capital Investment & Finance Ltd of the United Kingdom” was nothing but a fly-by-night company setup by a mahattaya Raj from Srilanka (thanks again, Idham). I don’t think I can ever understand why a government, seriously wanting to develop its flagship ‘mega-project’ would want to so deceptively feign into such despicable trickery. The name Boskalis was thrown around like badithakuru-viheyrey-alafaiy to hoodwink an unsuspecting public into believing that we were going to have a business park developed by the Dutch when the government was in fact getting into an agreement with a Sivarajah Manivannan’s two pound company (Sigh! Idham, you have every right to get even your tenth generation children to yell out ‘I told you so’ to all Maldivians).

Fast-forward one year. Its goodbye phantom projects, hello mega-projects, again. With President Nasheed intending to hold discussions with a “British company” to develop Gulhifalhu, the ‘mega-project’ hullabaloo is back with all its characteristic gusto. As an average Maldivian who is perhaps a little too obsessively convinced on the idea that a mega-island, gulhifalhu or Moon Bay Marina is our only hope if the plight of our people are to be anything but buying land to settle down alongside Dalits in Indian ghettos, I can only hope that it’s not another no-name fly-by-night “of the United Kingdom” company that my President is going to hold discussion with, this time around.

Launching my humble ‘Artwork’ Blog

2009-03-31T01:09:00.000-07:00

Announcing the awakening of the shy, unassuming and mediocre student of J. Swampillai dormant in me for over 17 long years! I’ve launched my artwork blog on http://canvasknaim.blogspot.com . Over the next few days I’ll be making more posts.

Water shortages, ‘four-gear gifilis’, ‘futtaru’ garbage dumps and ‘transshipment ports’

2009-03-24T20:10:00.000-07:00

Waking up to the first cock-a-doodle-doo only to stand in the early morning sun for hours on end in order to fill a 5 litre container with clean drinking water is becoming almost an annual ritual towards the end of every North-east monsoon for Shameema and hundreds of mothers like her, eking out their existences in their small villages. Shameema is not from a war-torn Afghan village but from Maldives where per capita income is almost ten times that of Afghanistan. Her island of Mulhadhoo, registered home of 350 people, located in the northern Ihavandhippolhu of Maldives is one of 60 odd islands to which her Government is contemplating on supplying reverse-osmosis drinking water on board small boats, after a prolonged dry spell.

Like most Maldivians living outside Male, Shameema and the rest of the eighty odd residents of the Mulhadhoo store their rainwater harvested from their corrugated iron roofs in polyethylene kalhuhan tanks; dispose their waste onto a dump on the seaward futtaru side of the island; and defecate into holes dug, as-and-when-nature-calls, on public beaches or ‘four-gear’ gifili latrines.

Meanwhile an army of Maldivians, mostly men anointed by their mighty political parties and financed by deep-pocketed bigwig resort-owners are preparing for their ritual once-in-every-five-years onslaught on islands like Shameema’s Mulhadhoo. This year an unprecedented 465 of them, sipping Italian Lavazza espressos in trendy cafés in Male or savoring the taste of an exotic vilaathu-sherbet in one of Maldives’ top-class luxury resorts, are meticulously planning their onslaught. Their arsenal will comprise of, among other things, an ostentatious display of verbose rhetoric on democracy, human rights, accountability and several other clichéd but little understood terms. There will also be a fool’s paradise of desalination plants that would, so they say, ensure a copious supply fresh water to all the households; diesel generators that would keep the fans and air conditioners running in houses with corrugated iron roofing sheets exposed to 12 hours of merciless equatorial sun to create an ambience that could perhaps be the envy of people living high up on the Swiss Alps. And there will also be an abundance of brand new 6 cylinder Yanmar engines that would propel fishing vessels out to the vast expanse of the Indian Ocean to enable diminutive weather-beaten fishermen to catch a glimpse of the mythical ‘minikaaraajjey gaskara’.

Shameema is no stranger to the chicanery of the Machiavellian planners. She knows that in a few weeks time she would be unable to stretch a leg without poking either a ‘rayyithunge khadhim’ or one of their lackeys. And though Shameema portrays an outward sense of nonchalance, she has a secret little reason to celebrate as well: the ephemeral treasures that come along with the politicians. The last time she was very lucky to grab a handful of those notes adorned with pictures of ‘medhuziyaaraiy’. But she remains unimpressed and nonchalant. And so are the majority of the people of Ihavandhippolhu and the rest of Maldives, for their taste for fantasy desalination plants, diesel generators bridges and flats have been cloyed by countless empty promises on phantom projects like the USD 300 million transshipment port that the previous government decided to ‘build’ in Ihavandhippolhu in the run up to the last parliamentary election.

I recently asked a good friend who I consider to be perhaps my small country’s version of Jeffrey Sachs, if he has anything to say about our politicians and Shameemas. His answer is simple. “Don’t put the blame only on the politicians. For as long as we have 142 islands with populations of less than a thousand people, there is no end to the stories of ‘empty-kalhuhan’, ‘four-gear gifilis’, ‘futtaru’ garbage dumps --- and the ‘transshipment ports’ are only a phenomenon deployed, not perhaps to camouflage trickery or finesse evil but to keep hope alive in an otherwise squalid and desolate environment”. As someone who as a child only accidentally escaped from the world of ‘fenthaangi/four-gear gifili’ induced Ascariasis,; and after thirty years, is still morbidly terrified of those horrid parasites that, ahem, creep out of the rectum after a spoonful or two of that slimy abhorrent stuff called ‘antipa?’, I can’t find any reason to disagree with him.

Our Special friendship with India: beyond the mirch-masala of Bollywood?

2009-03-21T21:09:00.000-07:00

India has always been our special friend. In Foreign Minister Dr. Shaheed’s words, “our primary strategic interests lie with India. And there is nothing that can change this plain fact”. India, despite the current economic chill, isn’t too far away from making its behemoth economy a global economic powerhouse.

We have with India strong military cooperation; bilateral trade, albeit, heavily skewed in favour of India; assistance in human resource development; and of course there is India’s unwavering relief and rescue, come the tidal surges of the south-west monsoon.

With a retired Lieutenant General as our government’s envoy in India, the relationship that was fostered under Gayoom, particularly in the aftermath of ‘Operation Cactus’ was largely centered around ‘defense and military cooperation’ which left us with, among other things, white elephants like INS Tillanchang. I, of course, don’t downplay the significance of IGMH, MITE, the recent USD 100 million budget support loan and the innumerable times India had lent a helping hand to us.

While we were deeply engrossed in Bollywood’s copious outflow of never-ending sultry mirch-masalas and India’s military toys, another small country Mauritius, located off the coast of Africa in the Indian Ocean signed a double taxation avoidance treaty with our mighty neighbour in 1983. Under the treaty no resident of Mauritius were to be taxed in India on capital gains made on the sale of shares of Indian companies by investors resident in Mauritius. The treaty did not have any affect until 1992 when India opened the country for foreign financial investors. During the same year Mauritius tactically allowed foreigners to register companies in the country for overseas investments. Foreign investors eager to reap the benefits of the Indian economy’s boom quickly routed their investments through Mauritius as this exempted them from capital gains tax completely. According some estimates nearly 40% of the $45-50 billion FDI inflows into India between 1991-2006 came through the tiny African state of Mauritius.

Luxembourg and Liechtenstein, two microstates in the heart of Europe, perhaps offer some interesting clues on the type of synergies that we could develop with India. Luxembourg and Liechtenstein with populations of around half a million and 40 thousand respectively, are among the richest nations in the world – thanks to their highly successful banking and financial sectors.

Nasheed’s government appears to be working towards steering the course of our special relationship with India to gear it more towards commercial ties. With key figures within MDP’s top brass who are known for their India-centric policies at the steering wheel, the day we could become to our behemoth neighbour what Liechtenstein is to Europe is perhaps not far way.

Thank you President Nasheed

2009-03-18T23:14:00.000-07:00

Not one iota of harm and no hardship whatsoever to anyone’s job or prospects for career advancement will be caused on account of any criticism or dissatisfaction with the government. This is the unequivocal statement President Nasheed has for anyone who is dubious of his commitment to free speech and democracy. The statement couldn’t have come at a more opportune moment. Of late, I have noticed that a growing number of bloggers are becoming increasingly apprehensive of the Government’s stance on what my good friend Hilath calls “the noble principles of democracy and free speech”.

Carbon Neutrality: Can A.S.I Moosa beat Pope Benedict XVI?

2009-03-13T01:45:00.000-07:00

If there’s any single quality in President Nasheed that differentiates him from the rest of us ordinary folks, it has to be his intrepid and almost uncanny ability to dream big even in the direst circumstances. In relative terms his ambitions to construct 10,000 housing units, build up a reserve of USD 800 million and keeping a market determined rufiyaa exchange rate at Rf 10 for a dollar at the end of his five year term, would rival even the most audacious hopes and dreams of Barack Obama - the name that has already become the epitome of dreams, hopes and ambitions for hundreds of millions of people throughout the world. And our President Nasheed is far from being done with setting goals and ambitious targets. On the environmental front he has a new dream – the target to make Maldives a carbon neutral country within the next 10 years! He has given this seemingly insurmountable challenge to A.S. Moosa (Sappé).

I did a bit of googling on the idea of carbon neutrality and to my utter surprise the task President has assigned to Sappe is in fact far more challenging than I initially thought. To succeed in his assignment, A.S.I Moosa would have to tussle, for the next ten years, with none other than Pope Benedict XVI. Almost a year and a half before President Nasheed set the carbon-neutral goal for our small country, the Vatican announced its plan to become the first carbon neutral state in the world through its climate forest in Hungary. Four other nations - Iceland, New Zealand, Norway and Costa Rica, have the same plan.

Carbon neutrality refers to achieving net zero carbon emissions by “balancing a measured amount of carbon released with an equivalent amount sequestered or offset”. Whether this is a feat A.S.I Moosa could possibly perform for our small, acutely resource constrained island nation that the UNDP has identified in its Oil Price Vulnerability Index (OPVI) as the most vulnerable country in the World to oil prices hikes, remains to be seen.

We are yet to know how A.S.I Moosa plans to go about to confront his daunting task. I don’t have any background knowledge to say anything about the issue from an environmental angle. But one thing I know for sure is that a lot of Maldivians are convinced that we need to do something to reduce our precarious dependence on imported fossil fuels. When oil prices hit USD 147 in July last year, I, for one, thought doomsday wasn’t too far away for our small country. With the unprecedented oil price hikes of 2007-2008, we were clearly caught off-guard as no developments plan in the country had factored in oil at the prices prevalent in the world market during that time. We were saved from an oil-price induced bankruptcy only by the dampened demand for oil brought about by the global financial meltdown.

Most Maldivians would presumably agree that despite the presence of high levels of sunlight and vast expanses of ocean which are potential sources of alternative solar and tidal energy for the country, our government under Gayoom did little to tap into these sources of power. This might very well be the approach A.S.I Moosa would take in his bid to beat the Holy See in the race to become the World’s first carbon neutral country.

Development plans and ‘the art of doing nothing’

2009-03-10T05:16:00.000-07:00

It’s been a while since I started maintaining a small personal archive of documents covering key economic areas of the Maldives. One thing I’ve noticed while doing this is that both the sheer number of documents and the depth and breadth of their coverage are quite astounding, to say the least. In fact, I don’t think I’ll be way off-beam to presume that there are probably few other microstates that could come anywhere close to where we are in terms of the sheer number and depth and breadth of coverage of our development plans.

The sad story, though, is that there is no single institution or agency in the Maldives that’s doing anything to keep track of these plans and documents. After having invested many hours to collect such documents, I’m convinced that, with perhaps a few possible exceptions, there is certainly a very comprehensive plan to cover every possible area of socioeconomic management and development in the Maldives – thanks to the umpteen number of TAs we received from our development partners in the last two decades or so. Surprisingly, the existence or whereabouts of these documents, stacked somewhere in the dark silverfish infested shelves of some of government building, collecting dust and spawning termite colonies, are known to few. And more surprising to me is the fact that a large number of these documents and development plans are applicable with only minor alterations even to today’s situation. Today, I skimmed through some of the documents in my small archive. Among the documents I have, I found the following to be particularly interesting.

1. Seventh National Development Plan, Ministry of Planning and National Development, 2006-2010
2. Strategic Economic Plan, Ministry of Planning and National Development, 2005
3. Third Tourism Master Plan, Ministry of Tourism and Civil Aviation, 2007-2011
4. Development of a Framework for Financial Sector Restructuring (ADB-MAL-TA2265)

The Strategic Economic Plan, 2005, developed by the International Trade Institute of Singapore tops my list. A country of our size and stage of development doesn’t need to look beyond this document for development plans. Every development plan that we would need at least for the next two decades or so is elaborated in this document in a very clear cluster based approach.

I have no clue as to why we didn’t we implement these plans. A good friend of mine once shared his explanation on this --- while the silverfishes and termites were busy quite literally building their empires in our development plans, we were busy pretending to be teaching ‘the art of doing nothing’ to foreigners. Unfortunately, we never taught any art to anyone but instead we did quite successfully master ‘the art of doing nothing’.

Stimulating what?

2009-02-27T23:11:00.000-08:00

An anonymous commentator on this blog scoffed at MMA’s Governor for advocating “deliberate shrinking of the economy by cutting investments and expenses”. Not too long ago our Majlis, seemingly eager to emulate the economic remedy of the US president Obama, considered a ‘stimulus package’ for our economy. I couldn’t help being a little curious as to what it is that we are talking about “stimulating”?

My good friend and former boss Jaleel, with all his characteristic pugnacity, outlined some interesting issues in his interview to Hirigaa. I’ve tried to add my two cents worth to the issues Jaleel talked about.

1. Lack of natural resources and borrowing - contrary to President Nasheed’s position on the country’s resources, Jaleel acknowledged the dearth of our resources and derided our debt-fueled development philosophy that hinges on the assumption that both the Government and the corporate sector could continue indefinitely with their borrow-your-way-to-prosperity approach.

2. Reigning in government spending – without fiscal discipline and bringing in the much needed public sector reforms, the donor community and institutional sources of concessional finance are unlikely to consider the Maldives seriously. Jaleel also debunked the myth about the much hyped ‘stimulus package’. I can only see reason to agree with him. Our government spending is almost equal to our GDP – thanks to Gayoom’s 30 year legacy. This makes us the highest spending government in the world in relation to the size of the economy – even the highest spending governments like that of Cuba have government expenditures at around 80 percent of their GDP. I am yet to learn about how any increased government spending in Maldives could, as the majlis and my anonymous friend says, ‘stimulate’ the country’s economy. On the contrary, owing to the heavily import-oriented nature of our economy characterized by a high degree of openness, any increased spending in rufiyaa will cause pressure on the rufiyaa/USD exchange rate which is already gasping for its final breath.

3. Decentralization and regional development – Jaleel found the government’s proposal to develop 7 regions to be beyond the capacity and means of the economy. Instead, he opined for a more workable approach of developing 2 regions. He raised an interesting issue about how we could possibly duplicate the USD60 million breakwater around Male, for all our islands. Diseconomies of scale? How about this - Dhuvaafaru, has been developed for 3,000 inhabitants of Kandholhudhoo, at a cost of over Rf390 million and Th. Vilufushi, another island destroyed by tsunami has been developed at whopping cost of Rf 340million for 2,000 or so people. Only two islands developed only for 5,000 people have set us over four-fifths of a billion rufiyaa behind.

4. Front-loading economic reforms – This is perhaps the most important issue Jaleel raised. Over the last few years, we have done an outstandingly good job in the area of legislative and political reforms and human rights. Perhaps there is no other country that made the kind of strides we made in this area in such a short span of time. But on the economic reform side things look dreadfully bleak. We are still too preoccupied with unwarranted political bickering and skullduggery to realize that we are pussyfooting on the much needed economic reforms. On the FDI issue, we are approaching an increasingly moribund world economy, armed only with the anachronistic Law 25/79, to bring in investments into an economy on the brink of bankruptcy. On the trade side, our LDC privileges are fast eroding. Awareness on economic issues? Talk about “TRIPS”, “TRIMs”, “GSP Plus” and other similar issues – I’m certain that most of these terms and issues would be alien even to the most erudite among us, but I bet at least a tenth of our fifth graders would know even the etymology of the word ‘filibustering’. It is little wonder that with only eleven years left for the ‘Vision 2020’ objective of making Maldives a “hub of free trade in the region”, the vision still remains an elusive dream.

Billion Dollar Dreams

2009-02-23T23:11:00.000-08:00

I can’t understand how we have become a country that’s so excessively engaged in self deceit. I have talked about this a month ago. And our State Minister Adil Saleem talking about investments of USD 1 billion coming to Maldives from Italy got me itching to say something again on this one dollar question about a billion dollars.

I don’t know how this term ‘billionaire’ and ‘billion dollars’ got so engrained in our Maldivian psyche and vocabulary. But the fact of the matter is that there are no billionaires in Maldives and there are no investors dumping billion dollars into Maldives. Any talk of billion dollar investments coming into Maldives is nothing but a blatant bald-faced lie. Why? Let’s look at the facts. It took over 35 years for the cumulative investment figure in our entire tourism industry to reach a billion dollars (assuming that the average investment in a resort is around USD10 million, the total investment in the 92 resorts would work out to around USD 1 billion).

Among the micro-states there are only a handful of countries that UNCTAD categorizes among countries with high FDI potential. Here’s how FDI inflows for these countries look like in 2007.

------------------FDI inflow ----------Inward FDI potential index
Malta ------------------0.9 billion--------------53
Cyprus ----------------2.0billion--------------- 45
Bahrain ---------------1.7billion ----------------29
Dominican Republic--- 1.6billion ----------------57
Trinidad and Tobago--1.0 billion--------------- 45

If annual FDI inflows to countries that have several times better potential than the Maldives to attract FDI, hovers around just a billion dollars, I cant see any possibility of Maldives receiving a billion dollars as FDI inflows from just one country. I don’t know why a lot of Maldivians so miserably fail when it comes to having an appreciation of the arithmetics needed to figure out that an economy that’s entire value hovers around only a billion dollars cannot possibly produce an individual billionaire or attract billions of dollars of FDI from just one country. No 300 feet-tall Sierra redwood is ever going to grow on our tiny islands. And no 100 ton blue whale is ever going to be seen swimming in our lagoons. I know dreaming big and thinking positive would, no doubt, be essential components of our drive to catapult the country to the ideal billion dollar ‘Aneh dhivehiraajje’ that we have for so long dreamt of, but I think there are a lot of half-baked Maldivians like me who cant help being wary of frivolous talk about billion dollar phantom investments.

Just a day’s headlines

2009-02-19T22:53:00.000-08:00

Headlines of the day for Thursday, February 19, 2009 in the Republic of Maldives.

1. 38 year old pedophile that made 35 under-aged boys victims of acts of pedophilia and child pornography is arrested
2. Infant suffocated to death and buried on Omadhoo beach – mother, grandmother and stepfather confess to suffocating and killing the new born
3. Police arrests 8 foreigners engaged in acts of prostitution
4. A Sri Lankan woman and 3 men arrested on charges of prostitution
5. Chinese man held in Maldives’ jail for 15 years without sentence – Ministry of Home Affairs claims to have worked to deport him for 15 years
6. Former President Gayoom criticizes Government’s Islamic scholars

These few headlines momentarily stripped me of whatever little sense of pride I have in me for my country. But then I don’t know why I’m feeling this way. After all, these aren’t anything new. They have always been an inextricable part of life of all human societies that ever existed ever since the scavenging biped walked out of Africa. But I still find it so difficult to fathom how these scabrous incidents that are so wantonly bereft of all standards of decency, have proliferated in its current scale and magnitude to become almost a part of everyday life in this sleepy island nation of less than a third of a million people that we Maldivians so often and so proudly declare to be “100percent Muslims”.

Raajjetherey Meehunge Hatharu kulhandhu Madhu?

2009-02-16T17:40:00.001-08:00

Racial supremacism, or Malé-Supremacism to be more precise, is very much alive. Have a look at this exchange on Dr.Waheed’s blog.

Maldives - 115 on the Corruption Index!

2009-02-15T07:56:00.000-08:00

We have always been dodgy and fraudulent at times. But I had absolutely no idea this could be so bad. Its so bad that after seeing this I inadvertently searched for fake moustaches. Guess whose country had just been given an ignominious 115 out of 180 by Transparency International on the 2008 Corruption Perception Index. Things were bad enough in 2007 when we were ranked 84. But 115 this year – that’s way below countries like Mali, Djibouti and Rwanda!

Meanwhile, even on the IFC/World Bank’s Doing Business Index we slid one notch to 69th place in 2008.

I don’t see anyone in our media talking about this. Maybe we found this to be so utterly shameful that we as a nation collectively decided to repudiate the issue. President Nasheed, in the meantime, is keeping himself busy with plans to open more banks in the Maldives and is working hard to attract investments into the country. His State Minister for Economic Development working with the newly created Invest Maldives has announced plans to embark upon an ambitious programme to attract FDI. I don’t see a country ranked at 115 by Transparency International making much headway with attracting FDI from legitimate bona fide businesses. A good reason why Singapore, ranked No.2 worldwide as the city with the best investment potential for 14 consecutive years, is able to achieve its enviable track record in FDI partly because of its rankings (world No 1 on the Ease of Doing Business and No 5 on the Corruption Perception Index) on indices such as these. I don’t see how clever marketing alone can simply beguile investors into pumping money into a country. Unless I’m missing something, to me it appears that there are quite a lot of housekeeping matters and things we need to fix before we try to market our country as an investment destination. If we don’t attend to these necessary preconditions for attracting investment, we are only putting our cart before the horse.

The storm ahead

2009-02-08T01:32:00.001-08:00

The economic woes of the country – a looming budget crisis, an impending tourism downturn, dwindling reserves, a seemingly overdue devaluation, – doesn’t deter our president. He has instead set ambitions targets for his country - building up a reserve of USD 800 million and keeping a market determined rufiyaa exchange rate at Rf 10 at the end of his five year term. Meanwhile the President’s office has announced plans to open more banks in the Maldives as a means to remedy the dollar crisis. The President himself believes “the registration of 3 new banks will immediately relieve the dollar crisis”.

The leading economists in the country, on the other hand, appear be towing a totally different line. Central Bank Governor Fazeel Najeeb claims to have “heard from media” that this country has a hard currency crisis; thinks devaluation isn’t going to help the economy; and is on a quest to find out what happens to “70 percent of the hard currency inflows into the country”, – about which he is absolutely clueless. And he goes on to offer his good, albeit impractical, counsel to the Government to “reduce expenditure and increase revenue”.

Abdulla Yamin, Gayoom’s trade minister for almost 15 years, takes the opportunity to lambast President Nasheed’s government for its alleged “lack of an economic plan” and talks of something Miadhu reports as President’s “ignorance of economical matters”. Ex-Governor of MMA and former Finance Minister Jihad doesn’t appear to be too enthusiastic to offer his wisdom. Instead, he seizes a media opportunity to talk about his impeccable track record on T-bills and abstinence from MMA borrowing .

Amidst all this hodge-podge of wisdom and economic doctrines from the pundits, I am confused. So, utterly baffled. I’m sure I’m not alone. Thousands of other average men and women must be trying to make sense out of this.

President’s rather ambitious plan on reserves and exchange rate might not be all that outlandish. But I, as an average Maldivian, is yet to find any clue as to how the president hopes to achieve this. What I know for sure, though, is that if the president doesn’t have a solid plan to do this, it would be rather foolhardy of him to make a pledge as audacious as this. The only strategy he has talked about so far - licensing 3 new banks - doesn’t seem to be all that promising. Every Ali, Ibrahim and Ahmed in this country is well aware of the two necessary, albeit not sufficient, conditions that could help alleviate the pressure on the rufiyaa - either the greenback will have to fall substantially in the international market or large inflow of hard currency will have to come into our reserves.

The possibility of a sudden fall in the greenback, in spite of the grim US economic outlook, seems very remote. Why? Contrary to popular belief G-8 is intervening, for geopolitical reasons, to set dollar values. Why are they doing this? Firstly, a large number of them have large outstanding exposures to dollar related assets. Secondly, at a time when economies are going moribund one after the other, higher oil prices are the last thing they would want to see. As oil is priced by OPEC in dollars, letting the dollar appreciate makes oil cheaper. Despite the unprecedented supply cuts by OPEC, oil is still hovering around $ 40. So, the chances of a sustained decline in the value of greenback in the international market, adequate to relieve the pressure on rufiyaa, are virtually nonexistent.

With economies literally going belly-up throughout the world, the second eventuality i.e. realizing a large inflow of hard currency looks equally grim. The USD 300million that the president confirmed to the media as had been received from India earlier, is yet to physically flow into the treasury. And even if it eventually does, it’s not going to solve our problem. If we continue with our current policy of pumping in our meager stock of hard currency, to maintain a grossly overvalued value of rufiyaa, the reserves will drain out in no time.

Governor Najeeb, of course, is right about the 12.85 dollar peg serving us well in the past. But what he didn’t say was why the peg was so effective. That was because the dollar was literally on the ventilator for almost five years. And, what saved us last year was nothing but the unprecedented advance lease rentals Government collected from the resort leases which increased our reserves to $300million – this had little do with either Governor Jihad’s ingenuity or the peg working miracles for us while we slept. So, the big question is what now? Are we going to wait and hope our good old ‘peg’ will work miracles for us again while the country runs out of funds to import even the very basic staple food?

The answer to this question is indescribably painful - not just for the politicians but more so for the common man. But we can’t go on draping a grim reality with complex economic jargon. So, let’s face the naked truth: rufiyaa is grossly overvalued. It will take nothing short of a miracle to save rufiyaa. A devaluation looks inevitable now. The mother of all storms is building up right ahead. So, let’s just brace ourselves for the tough times ahead. It’s going to be painful. Very painful, indeed.

Laws for the working class

2009-02-01T18:03:00.000-08:00

Ammatey has always been a hero. But today he is languishing in jail for gulping down the last dregs of what he thought was a James Bond's Vesper martini left by a tourist, at the resort where he used to work as a waiter. His crime? Alcohol consumption! His friend Khaleel’s story isn’t any different. He is banished to a remote island in the north for taking home half a bag of cement from the government school in his island where he used worked as a Sarudhaaru. The deepening smile lines on his weather-beaten thirty-something face, the painful calluses on his hands and the growing cataract in his eye – all bear testament to the hardships he has endured over the last 8 months. His crime? Yes, you got it right – corruption!

Both men are penalized for legitimate reasons. Alcohol is Haram - proscribed in this 100 percent Muslim country. And so is corruption. But what Ammatey, Khaleel and several hundred other Maldivians like them have for long tried to figure out is why the law in their country applies only to their type – the working class and the rank and file. It is no secret that many high ranking people in the echelons of power wouldn't let go of any opportunity to instantly gulp down anything that even remotely resembles alcohol. And our country is also yet to see any high ranking official involved in any substantive corruption case brought to justice, in spite of the numerous hush-hush allegations against former ministers, CEOs of State owned enterprises and some high ranking officials of the current government. Instead, as Dr. Waheed says, we only “left the corrupt scot-free and gave them promotions ”.

Our best minds - barking up the wrong tree?

2009-01-28T08:16:00.001-08:00

What are more than 2,500 of the World’s finest brains – top policy makers, academics and CEOs, doing in the Swiss ski-resort of Davos for five days? Soul-searching and deal making – that’s what they are doing. They are there to discuss a problem of biblical proportions. What began with the US sub-prime crisis morphed into something that the world has never seen since the Wall Street crash of 1929. The world’s finest brains - the likes of Joseph Stiglitz, George Soros and Rupert Murdoch, are still unable to fully fathom the depths of the recession the world is headed into.

The biggest economies in the world - US, Japan and Europe are in their first simultaneous recession since World War II. In spite of the trillions of dollars Governments around the world have pledged to pump into their economies to prevent more colossal failures like that of Lehman Bros and Bear Sterns, the problems seem more insurmountable with each passing day.

How about us Maldivians? Are we insulated from the Worlds problems? There is no reason for me, as an average Maldivian, to believe that the situation at home is any better, if not worse. With our gross reserves at less than 2 months of imports the rufiyaa is literally on the ventilator, silently praying for the USD 100 million life support pledged by the Indians to arrive before that final fatal beep.

While the world’s finest men and women are giving their best shot at helping the world’s economy recuperate to health, our best brains - our crème de la crème - seem to be embroiled in something this average Maldivian saw as a petty budget squabble between two agencies within the Maldives’ judiciary! God help this country!

Maldives is World Number ONE!

2009-01-24T09:23:00.000-08:00

Maldives is ranked World number ONE on a list of 181 countries, ranked by the World Bank/IFC in terms of ease of "paying taxes" (ahem, looks like the folks at World Bank forgot that we in Maldives hardly pay any taxes).

On the overall "Ease of Doing Business" we slid one notch to 69th place – making us still the most ‘business friendly’ country in South Asia. It is, however, disheartening to see that our performance in some of the most important indicators for business friendliness is still way below that of a number of developing countries – Maldives is ranked (177) in registering property; (145) in getting credit; (70) in protecting investors; (90) in enforcing contracts; (121) in trading across borders; and (123) for closing a business. Among our major trading partners, Singapore topped the list at World number 1 for a fourth consecutive year. Malaysia was ranked number 20, UAE 46, India 122, and Sri Lanka 102.

Default, insolvency and bankruptcy - Maldives style?

2009-01-19T08:28:00.000-08:00

‘Default’, ‘insolvency’, ‘bankruptcy’ – these words may sound familiar to you. But if you are to ask your Majlis member or a policy maker in the present or the previous government, chances are not many people would even bother to raise an eyebrow. Proof? It’s on BML’s audit report and Finance Ministry’s website – the delinquent borrowers of BML and the list of willful defaulters of Treasury loans. Among them are former ministers, members of our parliament, senior members of former and current government and a lot of other ‘honourable’ people in this country. We gave them millions as ‘loans’ – sorry, ‘gifts’ --- a loan, by definition, is something you have to pay back.

If I understand correctly, ‘default’ is a debt that a debtor is required to pay but has not paid and “insolvency” generally means that the debtor is unable to pay the debt. Although there are variations in the way insolvency and bankruptcy are treated in different countries, usually in most countries, following a petition for insolvency or bankruptcy, a court makes a ‘bankruptcy order’ or a ‘winding-up order’. The assets of the debtor are then seized and auctioned off and in the case of commercial entities bankruptcy proceedings are begun. Doing this is invariably linked to the very survival of the banking system.

If my childhood memory serves me right Itha Naseer, Finance Minister Ali Hashim’s late father D.I.K, Bangi Adam Fulhu, Onoda Zahir and several others were among the many ill-fated Maldivian businessmen whose assets were seized and forced into liquidation to settle off their debts. A few years ago, on a tour of northern and central atolls, I met a number of small borrowers of BML who were forced into liquidation by the bank. Back then, I saw it as perfectly normal as BML was only doing what all banks are supposed to do. But today, I’m utterly saddened to know that those fishermen and smalltime backyard farmers, desperately trying to eke out a living under very difficult circumstances, were forced into liquidation only to feed the insatiable credit appetite of 12 of our oligarchs – at a whopping direct cost of over a third of our GDP!

I’m not advocating for liquidating Fonaddoo, Sultans of the Seas or Villa Group for their non-performing BML loans; and I’m not campaigning for locking up Adam Zahir, Umar Zahir and others for their willful defaults of Treasury loans. I know that our legal system, fraught with problems, is inadequately equipped to deal with financial crime and I also know that the new government is still in the reconciliation mode. But, to me, that’s not an excuse to give a free reign to these unscrupulous people. If we are to extirpate this crookedness from our financial sector and if our banking industry and the economy are to survive, timely punitive action on ‘default’ is imperative. Inability to do so is tantamount to a free bequest of whatever little resources still remaining with the 99 percent of the people, to the obscenely rich less than 1 percent.

The country that doesnt feel the pain of the financial meltdown

2009-01-12T00:08:00.000-08:00

Ali and his new girlfriend just returned from a holiday in Malaysia. A few months before he left Male he spent his entire savings of Rf 10,000 to get the 'nice number plate' that he had wanted for over two years. Recession? Economic virtues? Well, Ali doesn't need to worry too much. He financed his Malaysia trip from a pay-if-you-can loan from his friend and the expenses of his two children, aged 12 and 9 from his previous marriage, whose expenses for the last five years have been taken care of by their grandfather, a Sarudhaaru at a government school are his last worry - at least for the time being.

Azoo, a twenty something job-hopping graduate who normally earns about Rf 8000, continues to shop, shop, and shop until she drops dead. It’s been six months since she quit her last job. But her insatiable appetite for her favourite DKNY fragrances, L'Oreal cosmetics and that occasional Jimmy Choo shoe continues unabated. Credit card debt? Well, that's not her worry. Her father regularly pays off – along with a good doze of scolding - the mountains of debt she accumulates on her credit card from advance rentals he collects from the two room apartment rented at their house.

Half way around the world, perhaps unbeknownst to both Ali and Azoo, the governments of US, UK and other industrialized countries and the corporate giants that seemed virtually infallible until recently, are struggling with their finances as the financial crisis gets deeper and murkier. For them there is still no turn around in sight. Consumers in those countries whose pockets are hundreds of times deeper than our Alis and Azoos are tightening their belts like they never did in the last thirty years. They are ditching their iPhones, flat-panel HD TVs and their gas-guzzling SUVs.

Ali and Azoo are among a growing group of hundreds of epicurean youth who live a Paris Hilton inspired live-in-the-moment life. I of course don't blame them for their spend-thrift mentality. Consumption is something so deeply embedded in us; it is so much hard-wired in our psyche now. What I sometimes have difficulty in understanding, though, is why our people continue to spend like as if there is no tomorrow while people in most parts of the industrialized world are bracing for the unhappy days with the homespun virtues of increased cost-cutting and parsimony. I'm sure if they had a choice, most people in the industrialized world too would continue to spend like our Alis and Azoos do. Choice – that's what differentiates our there's-no-tomorrow spendthrifts. Unlike the people from the industrialized world who are compelled to become financially independent by the time they reach their twenties, most of us have created the opportunity for us to continue to leech on our families or someone close to us, well beyond our thirtieth or even fortieth birthday. While the people in the industrialized countries literally feel the pain of the global financial meltdown, we continue our there's-no-tomorrow lifestyle; either blithely ignorant of what's happening in the outside world or willfully passing our pain to those unsuspecting victims around us who are inured to pain.

Yes, the healthcare for over-65s did get my knickers into a twist!

2009-01-07T00:26:00.000-08:00

My good friend, someone very well-versed in economic and financial matters, in an anonymous comment to a post on this blog said “this will get your knickers into more of a twist”. Fortunately, I don’t wear knickers literally, but this news item in fact did, as the Brits would say, get my knickers into a twist. My friend who posted the comment was referring to the new health insurance plan of Maldives for the over-65s.

Where in the world do you get a health insurance plan that is not ‘means tested’, has no exclusion of ailments such as dental cover, and assumes the public to be “honest”, when filling out the forms because the prospective recipients of cover are “law-abiding and honest”? An insurance professional I talked to says that he is yet to hear about any country that is foolhardy enough to provide such coverage free of charge. The bit of googling I did to find anything comparable to this was also entirely abortive.

Don’t get me wrong. I’m all for President Nasheed’s initiative to provide a relief to the large number of people who are out on our streets literally begging for their life-saving prescription drugs. Providing health cover and a safety-net for our elderly folks is long overdue in this country. I have absolutely no doubt about that.

The health insurance cover, I understand, would be provided in addition to the Rf2,000 monthly retirement income that the government plans to give to our over 65s. With 13,000 people eligible today, this universal retirement pension scheme alone would cost our taxpayers a whopping Rf 300million annually. And in 20 years time this will spiral out of control to Rf900 million annually. As the health insurance scheme is not means tested and relies on the ‘honesty’ of those seeking the cover, I have no way of commenting on the cost of this scheme. But as an average man observing developments in my country, I can’t help being wary of how well the health insurance scheme and the pension plan were studied for their long-term fiscal sustainability. And in a country where almost three out of four people are below 35 years of age, I certainly wouldn’t be surprised to find a vast majority of people skeptical on such a wholesale free transfer of resources from the current working population to the retired.

Is something still very wrong?

2009-01-03T08:26:00.000-08:00

The calls for freedom, rights and democracy that resonated throughout the country still linger on in my ears. The calls were not in vain. The elusive freedom that we sought for years did finally come to this country. And so did democracy and a lot of our fundamental rights. We have a democratically elected president in office. The government machinery and the institutions, albeit slowly, are being forced to wakeup to the new realities. And today, we are probably one of the freest people among the developing countries.

One thing that struck me over the last week or so is that in practicing our new found freedoms and rights, our people seem to be going a little overboard, a little too early. While people from Maduvvaree , Maaivadhoo, vashafaru , Madaveli , Fiyori and a whole lot of other islands were exercising their ‘freedoms’ in their islands, presumably in an attempt to vent out their pent-up frustrations over lack of public infrastructure, two of our state ministers State Minister Shafeeg and State Minister Shahid had to change gear to riot control mode in Male. Just two week ago our new housing Minister Aslam had a taste of public outrage when he visited his native island Faresmadhoda.

As an average Maldivian who has for so long yearned for freedom, rights and democracy, I can’t help asking where our new found democracy and freedoms are taking us. I don’t know any more than the Yahuya Average of this country does about freedom and democracy but I think these virtues are by no means an end in themselves, but a means to an end; and that end, I presume, is the collective happiness and well-being of the society. And I have serious doubts on whether we are heading towards this end. Just as when the country, for the first time in the living memory of 80 percent of its people, gave the power to individual people to influence the political direction of this country through the virtue of democracy, there seem to be quite a lot of things not quite alright. After all it has only been less than 60 days since President Nasheed assumed office. Any reasonable person in this country would agree that it would be grossly unfair to blame Nasheed’s government for the things done and not done before the new government took over the reins of power. So, the big question is why the protests? And why are they happening in so many places?

My contention is that there must be something very wrong for all these protests to precipitate so prematurely in so many places. The only possible responses that I can think of are we were either barking up the wrong tree, or we put the cart before the horse.

Is there a billionaire in Maldives?

2008-12-31T00:32:00.001-08:00

‘Billionaire Gasim Ibrahim’? I’ve come across this at least a dozen times over the last few years. Miadhu Daily is particularly fond of referring to Mr. Qasim Ibrahim as a billionaire. I’m not too sure if this is a satire on Mr. Qasim or someone is aiming for a bargain at inflating his ego. The words ‘millionaire’ and ‘billionaire’ have become a ubiquitous term in our Maldivian psyche and vocabulary in the recent past. I’ve seen a rise in this phenomenon particularly in the aftermath of the 2006-2007 resort-leasehold gambling game that saw the creation of a handful of overnight millionaires.

A millionaire or a billionaire, according to conventional thinking is someone who has a net worth of a million or a billion, measured in a major international currency such as the US Dollar or Euro. This definition unfortunately excludes, from the millionaire / billionaire club, wannabes who are eager to somehow do some clever math in Indonesian Rupiah to get into this elite club. (There goes my hope of ever claiming to be a billionaire!)

Now going back to the original question – is Mr. Qasim a billionaire? In the absence of tax returns or disclosure requirements this is difficult to ascertain with absolute certainty. But based on anecdotal evidence assuming that Mr. Gasim owns 10 resorts in Maldives, a few hotels overseas and shares in several local companies, and has liabilities of almost similar magnitudes, it is highly unlikely that Mr. Qasim’s net worth would even be USD200 million.

Another question that begs to be asked is - Is there a billionaire in Maldives? I still remember how I had a lengthy argument with a local businessman a few months ago when he said Mr. Champa Afeef will make it to the Forbes list in a year. For a while I thought my friend was joking. It was hard to believe that this fairly well-educated man in his forties, who has spent half his lifetime doing a sizable private business, was unable to have an appreciation of the arithmetics needed to figure out that an economy that’s entire value hovers around only a billion US dollars cannot possibly produce an individual billionaire. Do 300 feet-tall Sierra redwoods grow on our islands? Or has anyone ever spotted a 100 ton blue whale swimming in our lagoons? I, for one, would be happy to see the New Year 2009 produce a Maldivian billionaire, but the hard fact of the matter is that the size of our economy is infinitesimally small to give rise to a Warren Buffett or a Lakshmi Mittal. It is highly unlikely that even the combined net worth of Mr. Qasim, Mr. M.U Manik and Mr. Champa Afeef would tally a billion dollars!

Wish you a very Happy New Year!

Some Concerns on the Universal Pension Scheme

2008-12-28T18:52:00.000-08:00

If my understanding of National Social Protection Agency’s interview to Haveeru is correct, 13000 people including former Ministers Karanka Ibrahim Rasheed and Umar Zahir will be drawing Rf2000 per month from NSPA in a month’s time.

It looks like the Government put forwarded this universal pension scheme as a means to provide a safety net for our burgeoning elderly population. Anyone could see the merits of a universal pension scheme as our early baby-boomers are already headed towards retirement. My concern with NSPA’s pension scheme is not because it includes ex-ministers, but because this scheme, in its present form as explained in NSPA’s interview, will most probably become unsustainable in the next five to ten years. And I’m also a wee bit skeptical as to how much of a free transfer of resources this country can afford from the current working population to the retired. Now don’t get me wrong – I’m all for any effort that would ensure a higher standard of living for all age-groups of people in this country.

In the absence of a proper mechanism to do a means testing, the pension will have to be made a universal state pension. With around 13,000 eligible people eligible today, the total cost outlay of this scheme to our taxpayers is a whopping Rf 300million annually. And what we sometimes quite conveniently forget is that unlike in most other countries where baby boomers were a post-war phenomenon, we had our baby-boom during the late 60s, 70s and early 80s. With our life expectancies reaching levels that are comparable even to that of the developed world, in another 20 years the baby-boomer will reach retirement and we will have over 38 thousand people eligible for this universal pension. And the cost of this scheme would then spiral out of control to Rf900 million annually. And lets not forget the financial burden our government already has on account of the non-contributory pension scheme that pays 50 percent of the basic monthly salary as an on-going pension after every 20 years of service, to all government employees.

While most of us appreciate NSPA’s efforts to provide a safety net for our seniors, it appears that without major overhauls to the pension schemes, in terms of the way we fund them, they would collapse in less than ten years. And to me, the most painful part of this is that once the decision has been made to provide a universal non-contributory pension without any means testing, the ‘political cost’ of attempting to overhaul the scheme would be fatal to any government.

If you are buying Euros in Male you need to know this

2008-12-28T02:28:00.001-08:00

A friend traveling abroad gave me a call to say that he is buying Euro as no bank would sell him the 1,500 Dollars he needed today. It made me a little curious as to how our local banks could simply go on selling Euros at a time when the country has an acute shortage of hard currency. A few punches on the calculator will tell you how they do it. Banks in Male are selling Euro at Rf 18.13 which is actually a premium compared to the USD rate of 12.85. This is equivalent to paying Rf13.10 for a Dollar! Most people who happily buy Euros at this rate are somewhat beguiled into believing that they are avoiding a loss by not paying Rf13 or above for a Dollar. So, the next time you buy hard currency don’t buy Euros at this rate unless you have no problem with buying Dollars on the black-market for Rf13.10!

First 30 Days – A Summary of Achievements of the Government

2008-12-24T02:36:00.001-08:00

It’s been just over a month since a new president was sworn into office in the living memory of over 80 percent of our people. The jubilation and euphoria is still very much alive. Thirty days in office is an important milestone both for President Nasheed and all Maldivians, regardless of the political affiliations. The Press and Publication’s Section of the President’s Office has published a document entitled ‘First 30 Days – A Summary of Achievements of the Government’ to mark the occasion. My friend who asked me to have a look at this document was utterly outraged and thought this is nothing but an affront to the President himself. And after having a cursory look at the document, I can’t find any reason to disagree with him. It is disheartening to see the capable new team at the President’s Office giving this rather premature opportunity for Mundhoodh to have the last laugh.

‘Vicks-Vaporub’ treatment for the Economy

2008-12-22T02:48:00.000-08:00

Kasimbe’s biggest regret in life is that he didn’t agree to amputate his thumb a year ago, after what looked like an insect bite worsened to develop gangrene. The year long ‘Vicks-Vaporub - Balm’ treatment he took was to no avail. Gangrene formed and he opted, against Dr. Balakrishnan’s advice, not to do away with his thumb for the thought of having to live, for the rest of his life, without a thumb, was too painful to him. Now, a year later, he is leaving to Trivandrum to amputate his entire left arm in a desperate attempt to save his life.

Kasimbe isn’t alone in delaying painful decisions. That’s what we did as a country, under Gayoom, for 30 long years. We procrastinated, delayed any decision that looked painful. We knew our problems - we did not pay the real cost of our electricity, health care, fuel, and water etc; almost one in every five adult is a civil servant; five out every hundred Rufiyaa we earn goes to support our military. With no direct taxation the budget revenues were inadequate to finance the uncontrollable government expenses. We were living beyond our means. Every time we had a shortfall, we borrowed our way out of it without ever attempting to find a permanent cure to the problem. Our policy makers knew very well that this sort of ad-hoc and piecemeal policies only gave symptomatic treatment that provided a momentary relief from pain, rather than addressing the real problems. Addressing the real problems and bringing the much-needed structural changes to the economy were simply delayed because the people at the helm of our affairs found the changes to be too painful. So, we continued to treat our economy with ‘Vicks-Vaporub’, for a good 30 years and the result is…nothing but gangrene.

It’s been over a month since we closed Gayoom’s chapter. And now it looks like the looming dollar crisis is going to be the first real challenge to our new Government. I can understand why President Nasheed’s government wouldn’t want to face the inevitable devaluation, at least during his all important first 100 days in office but if we are counting on the USD100 million loan pledged by the Indian Government to save our Rufiyaa, that’s tantamount to applying ‘Vicks-Vaporub’ on Rufiyaa. The real ailment remains untreated – only to recur in another month or two.

The lost opportunity for a ‘paradigm shift’

2008-12-18T00:34:00.000-08:00

How my friend Ali Farsighted, over a casual coffee, talked about the need for a ‘paradigm shift’ in Maldivian thinking is still fresh in my memory. That was a few weeks after the 26th Dec tsunami. I thought Ali was on the money in his thinking on his ‘paradigm shift’ in population consolidation. His contention was that the calamity had given our people a once in a lifetime opportunity to rethink the way only 300 thousand people are living on 195 islands which are suited to one thing only - a subsistence based, nomadic fishing community.

I also remember how another friend of mine, then working at Planning Ministry, distanced himself from the Government’s decision to develop R. Dhuvaafaru, when I asked him how the Ministry had selected the island as the new abode for the residents of Kadholhudhoo. Today, after 4 years, the island has been developed for its 4,000 inhabitants, at a cost of over Rf390 million – that’s a staggering hundred thousand rufiyaa per person. Another island destroyed by tsunami, Th. Vilufushi, has also been developed at whopping cost of 340million rufiyaa – that’s over Rf 130,000 per inhabitant for the 2,500 odd people who will ultimately call the island, home. Only two islands have set us over three-quarters of a billion rufiyaa behind. And there’s so much more to this. Now that our people ‘know’ what their ‘rights’ are, there are some 190 odd islands that would not shy away from going Maduvvaree’s way. After all, if people in Dhuvaafaru, Hulhumale, Vilufushi and Male can have safe infrastructures in their islands, there is no reason to believe that the Government cannot provide the same to Madduvvarians. The demands will be unstoppable. Decentralization and ‘local governments’ aren’t going to do the trick.

I must say, Ali was damn right. Tsunami was the only opportunity we had to convince Yahuya Average that he has no choice but to move away from his fishing village of less than 300 people if he wants his two sons and three daughters to complete Cambridge A levels and his grandmother Faathumafulhu to undergo the cataract surgery that she had required for years, without having to leave his home island. But now it looks like we have lost that opportunity forever. New Housing Minister has said on record that he doesn’t want too many Hulhumales. Housing Minister is right. Large scale dredging does irreversible damage to our coral islands. But if the plight of Yahuya Average’s fifth generation children are to be anything other than buying land to settle down alongside Dalits in Indian ghettos, we cant help but be fascinated by the seemingly utopian Bushry’s ‘safe island’.

Maldives – moving closer to end years of anti-Semitism?

2008-12-09T00:32:00.001-08:00

What has Israel bashing got to do with defending Islam in Maldives? Quite a lot – at least to some local politicians. In this otherwise lethargic country some people could get really worked up when it comes to Israel and Jews. In fact, over the years, the politicians and Imams in our small country has honed and fine-tuned their skills in anti-Semitism to such an extent that Hitler himself would be turning in his graves. We even have a special home-grown Dhivehi language word, ‘i-yahoodi kan’ - is there an English equivalent? The closest that I can think of is the sleaziest form of trickery and chicanery. Views and opinions on Israel and Jews have been a make-or-break issue for politicians. Gayoom’s early political career, for instance, owes a great deal to a carefully nurtured Maldivian’s fear of Jews. Many believe it was Gayoom who was largely the architect of the about turn President Nasir took in the 70s after being the first country to recognize the state of Israel. Now, after 30 years, yet another aspiring politician Umar Naseer seems to be trying his luck on the same platform.

During Gayoom’s last few years, however, there were some signs of a détente - we co-sponsored the US resolution on holocaust remembrance in 2005; and in 2007 we co-sponsored another US- resolution condemning holocaust denial. Now our pragmatic foreign minister Dr. Shaheed who was accused by the likes of Umar Naseer to have clandestine links with U.S billionaire George Soros and Zionist organizations have gone one step further by saying that he would “not rule out engaging in diplomatic relations with Israel”.

What I as a Muslim cannot understand is why we so often talk about ‘Islamaphobia’ in the west while we ourselves are so much engrossed in such hatred towards the Jews. Is this about doing our bit to defend Islam? I have absolutely no clue, but the Prophet Mohamed that I’ve read about and come to know of did co-exist with Jews in 7th century Yathrib. And I’m sure our today’s ‘Kasautee-moms’, glued to the box 16 hours a day and those lanky Billabong-clad ‘parteys’ out on our streets couldn’t care less about a never-ending centuries old war that’s being waged half way around the world for reasons that they know nothing about. It looks like our hatred of Jews and anti-Semitism is nothing but just another political tool in the arsenal of a few pseudo-religious politicians aspiring to ride on a holier-than-thou kind of political platform.

Why aren’t investments coming to South Asia’s most business friendly country?

2008-12-05T00:28:00.000-08:00

I was very happy when the World Bank’s ‘Doing Business Report 2006 and 2007’ report ranked the Maldives as the most business friendly country in South Asia. This coincided with the time Mohamed Jaleel was quoted by our media almost every other day, about the development of a USD300million transshipment port in Ihavandhippolhu, a USD 200million port city in Gulhifalhu and an integrated infrastructure project in Hulhumalé phase2. My happiness turned out to be somewhat short-lived. The promised investments did not come and the projects appear to have been shelved now. To make matters worse, funds have even dried up for most of the 50 or so resort islands that are currently in various stages of development. I cannot help asking why we are unable to attract FDI the way some small countries like Cyprus, Trinidad and Tobago, Mauritius, Malta are doing. If Nasheed’s government is serious about getting FDI, he needs to get his Minister Rasheed to quickly remove the bottlenecks and address some of the pressing problems in the area.

▫ Interference and corruption – government has previously mixed political objectives and influence with commercial and infrastructure projects (Ihavandhippolhu transshipment port, Gulhifalhu, Hulhumale phase 2, Hulhumale Ceylinco project etc). This gives wrong signals to investors who know that they need ‘influential business partners’ on their side if they want to stand a chance of winning a project or approval for a project. However, most investors with a good international standing would want to be judged on the basis of technical criteria rather than their political connections and knack for influence paddling. As for corruption, with Transparency International giving us a world ranking of 115 – way below countries like India and Srilanka, it’s a little… ahem…a paper bag, anyone?

▫ Inadequacy and ambiguity of legal framework –ambiguous and conflicting messages are given to potential investors, often as a result of vested interests of powerful figures within the government. Important pieces of legislation in areas such as intellectual property and instruments to deal with WTO’s TRIPs etc are non-existent. The lack of rules and regulations that unambiguously protects the interests of investors exacerbates the ambiguity and makes the operating parameters of the investment climate hazy. Can someone tell me the latest policy on EEZ fishing licenses, for instance?

▫ Unclear entry requirements and non-transparent operating conditions – Another major deterrent to attracting FDI is the lack of clarity in rules concerning entry and operation requirements and conditions in major sectors of the economy. For instance, over the recent years MMA has had a policy of licensing banks of international repute based on their ratings. But I’m not too sure how Moody’s would rank the Mauritius Commercial Bank, the most recent bank to set-up shop in the Maldives. Another example of how not to do things is the way someone (Gawd, I cowed again!) tried to get commission from each and every FDI initiative that ever crossed the Trade ministry’s door.

▫ Insufficient coordination – Foreign Investment Board and the FISB, instead of proactively seeking investments, are passive in their approach and only serve to rubber stamp projects approved at the very top. In addition, insufficient coordination among multiple govt agencies and the bitter ‘turf wars’ within government agencies, often owing to rather petty political squabbles and vested interests, continue to derail our efforts to attract FDI.

▫ Lack of expertise –FISB’s mandate and authorities are somewhat nebulous and the resources of the agency are too thinly spread. As a result there are serious shortfalls of institutional capacity and expertise necessary to promote and implement projects at the agency.

Enough of Human Rights and Political Reform! Where is the Economic Reform?

2008-12-01T02:00:00.000-08:00

Maldives has become probably the first micro-state to have a Human Rights Ambassador. This would be seen by many as an indication of our intention to proactively promote and internationally advocate for human rights. After all, why else would a country the size of Maldives opt to have a human rights ambassador? Most micro and small states that I know of limit their engagement in the area of human rights to the domestic front. Championing human rights, I don’t think, would be seen by many to be within the gamut of foreign policy of a microstate.

Over the last few years, we have done a remarkably good job in the area of human rights. In fact I can’t think of any other microstate that made the kind of strides we made in this area in such a short span of time. On the domestic front we developed a well functioning Human Right Commission. Internationally, we acceded to most of the international conventions such as the International Covenant on Civil and Political Rights, the UN Convention against Torture, the Optional Protocol to the UN Convention against Torture, the International Covenant on Economic, Social and Cultural Rights, the Optional Protocol to the International Covenant on Civil and Political Rights, and the Optional Protocol to the Convention on the Elimination of all forms of Discrimination Against Women – just to name a few. We have also successfully completed the diffusion all the criticisms we faced in the aftermath of the 2003 jail shooting incident - kudos to Dr. Shaheed for what he did as Foreign Minister.

The bottom-line is, given the size of Maldives and its geopolitical significance, I believe we have put more than adequate resources in this area and we shouldn’t be spending any more of our meagre resources to venture into new areas in human rights. In fact we have been so much engrossed in human rights and political reforms that we have completely forgotten about other important areas such as economic reforms. Anymore resources and energy in this area is only going to further clog and dampen the much needed economic reforms.

Himeyningilaab is wrong about 50 years resort lease extension

2008-11-29T01:10:00.000-08:00

Himeyn-ingilaab calls our Maldivian business community a group of outmoded thieves - a group of people that have run business evading taxes - shameless thieves committing acts of piracy! I have great admiration for the work Himeyn did during the run up to the election. But this time I’m totally clueless as to the basis for all this ignominious name calling and recrimination.

Sometimes to prove a point we become unreasonable and resort to baseless attacks. We forget to take stock of the actual ground realities. Is there any government, anywhere in the world, that is able to stay away from the influence of the powerful oligarchs? The businesses in the industrialized countries pay taxes to their governments, not because they are any more God-fearing, or have higher moral standards than we Maldivians do. They pay taxes only because their countries have the appropriate legislative and regulatory frameworks to compel them to do so. Even after having these systems in place for over a hundred years, most of them are always on the look out for any avenue that would give them legitimacy to pay even one less dollars in taxes. We in the Maldives haven’t been able to develop the legislative framework and the enforcement mechanism for taxes. So, I don’t see any way we can squarely put the blame on the business community for not paying or developing a tax regime. The government, business community, the civil society, the Rayyithun - all of us together are responsible for this.

As for the extension of resort leases, I don’t see much of a problem with that. On the contrary, I think, this is a must if we are to remain competitive both as a lucrative investment destination and as an attractive tourist destination. Let’s face the facts – we have to understand that we are far from being an attractive investment destination even by developing country standards. The only thing we need to do, while we work on the extension of the resort leases is to make sure that when we give the resort owners a deal, we give them a deal that’s fair to even to the most destitute single mother living in the most dilapidated household in the most remote island in the Maldives (sorry, just borrowing a phrase from Himeyn). The fairness of this deal could be ensured by increasing the lease rentals or by implementing a bed tax, a GST on tourism sales or a corporate profit tax. I recently read an article somewhere that says that over 80 out of the 89 odd resorts currently in operation, still have USD4000 or less as annual lease rentals when the going market rate at the more recent rounds of bidding are over USD20,000 per bed per year. These are the things that we need to be working on instead of vilifying our business community and calling them a bunch of unprincipled pirates filching money out of our destitute people. After all it is only natural that any profit-maximizing business should try and lay hands to every extra dollar possible.

Our government - the biggest spender in the world

2008-11-25T04:47:00.000-08:00

Finance Minister Ali Hashim has determined our budget for the next year to be Rf13 billion. In spite of axing Rf9billion from the budget planned under Gayoom for 2009, our government is still the biggest spender in the world in relation to the size of the economy – even the highest spending governments like that of Iraq and Cuba have government expenditures at around 80 percent of their GDP.

While most of us fully understand the reasons why the new government, at least over the short term, is unable to make good on the pre-election promises to reduce government expenditure, I could not help doing a quick search on what the ideal size of government spending should be. Economist Gerald Scully’s research shows that government spending beyond the ‘optimum’ level of about 23 percent of GDP, generally results in government becoming a net drain on the economy. Empirical evidence shows that up to this ‘optimum’ level, every dollar government spends provides more than a dollar's worth of economic growth. I know it would be inappropriate to generalize this ‘optimum’ level to countries such as the Maldives. But if we are to go by Scully’s ‘optimum’ level of budget, our budget should be less than Rf300million –that’s only a fourth of the current budget. This is, ostensibly, a little too ambitions, but on close scrutiny, if countries like Mauritius, Cape Verde and Aruba are able to run their governments with only less than a third of their GDP, there is little reason to believe that we cant do the same. But given some of the structural and policy issues within the institutional and organizational structure of the government, and the pressing public finance issues below, this appear to be out of question, at least for the time being.

Low budget revenue and inadequate tax receipts - The revenue base is far too narrow and comprises mainly of import duties, tourism taxes, resort lease rents and profits from SoEs.

Wasteful public expenditures - Government expenditures, particularly the current expenditures have increased steadily over the years owing largely to our disproportionately large public sector.

Burgeoning deficits - Although the government has presented, over the years, what it calls ‘balanced budgets’ to the parliament, the budget deficits have ballooned to unsustainable levels, leaving a huge stock of domestic debt of about RF2 billion.

Inappropriate means of deficit Financing – our budget deficits are financed either through monetization (a fancy term for printing money!) or from external sources – mostly through borrowings. This has not only created a huge domestic debt (because MMA prints money and lends to Finance Ministry) but an increasingly burdensome external debt position. More worrying is the fact the government, in the recent years, has resorted increasingly to commercial borrowings as a means to finance budget deficits.

We are yet to know how the new government plans to finance the budget. With our stock of external borrowings reaching over a half of GDP coupled with the financial meltdown and the global economic downturn, it looks like the new government is left with few options. So, the big question now is how our new government is going to finance the costs of providing health insurance to 100,000 people and waiving off import duties on essential foods, drugs and diesel.

It’s the economy, stupid!

2008-11-21T18:37:00.000-08:00

Some of you guys out there are going to ridicule at me, again - call me George Soros and other funny names, but that doesn’t change a thing about the fundamentals of our economy. I don’t claim to be George Soros and I of course don’t own Berkshire Hathaway. But this mediocre man with perhaps below very average intelligence also knows when all the telltale signs point to only one thing: without a substantial injection of hard currency into our economy, rufiyaa will have to be devalued. Our dollar crisis this year, is very much of an anomaly from the seasonal highs and lows that has become a characteristic feature of our economy. Here’s why.

Our gross reserves are at just a little over 2 months of imports - almost a 15 year low. As far as I can see there’s no way reserves are going to increase to US$380.8 million or 3.2 months of imports by the end of the year, as has been predicted by MMA (see 4.2 of Monthly Economic review, Oct 08).
The strong dollar coupled with the recession in EU region will substantially reduce our inflow of hard currency. So far, we haven’t seen this happening because of the 2-3 quarters’ lag that’s involved in the cycle. Last year we were saved from a devaluation by the unprecedented advance lease rentals we collected from the resort leases which increased our reserves to USD300million.
We are in the midst of hajj season, school holidays and bodu-eid. Our people are traveling overseas in large numbers (how they finance it would make another good blog post). Our hajj travelers, holiday makers and expat teachers are going to drain, within the next month or two, whatever little stock of hard currency we have within our banking system now.
With oil below USD50 now, the dollar isn’t going to fall anytime soon. Over the last five years, with greenback on the ventilator, we automatically offset any pressure on the Rufiyaa resulting from the expansionary policies of Gasim (kudos to Ali Hashim for trying to reign in the pressure, but this could be too little too late). We did the last devaluation under Mohamed Jaleel in July 2001. Ever since, the Euro has generally appreciated against the dollar thus making Maldives cheaper for our tourists from the EU region - but this is a thing of the past now.

Laila Ali, our new First Lady - how are we going to see her?

2008-11-20T03:00:00.000-08:00

It’s a little too early to say the role our new first lady Laila Ali is going to play in our ‘aneh dhivehiraajje’. So far, I must say, she has done and outstanding job successfully staying out of the limelight – that’s in spite of the continuous barrage of criticisms and vituperative remarks (what’s the English equivalent of Auguraanu?) that were so much a part of her husband’s life throughout the last three months of the intense campaign period. I’m sure the young mother of two must have been so relieved. But now, as the new first lady of the country, she has been catapulted, albeit involuntarily, into public life, and I, for one person, expect her to assume an important role in serving her people alongside her husband. I have to admit I have never met or talked to Laila Ali, but the people I have talked to all say that she has the intelligence, wit, and of course, the looks (was President Mohamed Ameen ever married to Baarashu Ramla? ask your grandpa), to outshine all our former first ladies. So, the question that begs to be asked is, are we going to see her, in her public life, as someone like our ex-first ladies Nasreena or Naseema? Or are we going to see her as our answer to

Jordan

’s Queen Rania?

Nasreena, our first lady for the last 30 years, although seemingly introvert in character, is believed to have wielded great influence in the corridors of power. In public life, the seemingly unassuming, bambi-eyed first lady is known more through her association with SHE and the NGOs work in the health sector, particularly in Thalasemia and Women's Health.

The first lady that most of us knew during President Nasir’s govt was Naseema Mohamed. The soft-spoken, petite and beautiful lady is still in public service - long after President Nasir is gone. Although a nurse by training, she is known more for the work she has done in the area of linguistic and historical research. Mariyam Saeed, the senior wife of President Nasir, also left her mark quite successfully in the Maldivian literary scene as one of the most accomplished poets of her time.

I googled up for interesting first ladies and here’s my picks - among international scene and the Arab-Islamic world (for the simple reason that we group ourselves with them, mostly).

Hillary Clinton – obviously, one of the first that comes to mind - but I don’t know if the world now remembers her as an American first lady, Barrack Obama’s opponent in the recent democratic race, Senator Clinton or the lady who forced the most powerful man in the world to sleep in the garage in the aftermath of Lewinsky affair. She is powerful, elegant, confident and unyielding in all the different roles we saw her in. Looks like, Michelle Obama, as the US first lady in waiting, has a tough act to follow. (I conveniently forgot that primate W’s wife!)

Queen Rania of Jordan, counted by Forbes Magazine among the 100 most powerful women in the world is a rare combination of sheer beauty, intelligence and political power. Born to Palestinian parents and educated at American University in Cairo, she is known for her role in philanthropy, advocacy for women’s rights and in clarifying misconceptions about Islam.

Carla Bruni, the first First Lady to have nude pictures posted on the Internet who is said to have said she easily gets “bored with monogamy”, is arguably the sexiest of them all but she hasn’t so far been seen as too keen on assuming any of the traditional roles of first ladies.

Asma al-Assad of Syria is beautiful, quick-witted, and intelligent. Married in 2000, to Bashar al-Assad, she has worked and supported programs designed to improve rural development including capacity building of communities and promoting local culture and heritage.

Are we starting off on the wrong foot?

2008-11-17T23:26:00.000-08:00

It’s only been two weeks since President’s special envoy Zaki talked about inviting Aung San Suu Kyi to the swearing-in ceremony of President Nasheed. Just yesterday our newspapers carried an article that said our government wants to democratize the Great Socialist People’s Libyan Arab Jamahiriyya under the ‘Brother Leader’ of the Great Al- Fatah Revolution!

President Nasheed, in his first interview to the international media after assuming office, said his government is planning to establish an investment fund with earnings from tourism, to buy land from another country, should rising sea levels threaten the existence of our country.

I’m not against promoting democracy, but to me, this rather neo-Reaganite championing of democracy seems a far too grandiose proclamation for a country of our size and resources. I wonder why our mighty neighbor India, in spite of being the world’s largest democracy, with its vast arsenal of hard power and formidable base of soft power, hasn’t dared to venture into such foreign policy adventures even at a regional level. I know it’s a little too early to be commenting on the policies of the new government. But if the above developments offer any clue to how our foreign policy is going to be shaped under our new government, it looks like Dr. Ahmed Shaheed and his team should be prepared for one hell of a crusade.

Your money to lose value soon!

2008-11-15T19:13:00.000-08:00

Our Rufiyaa, pegged to the dollar, has remained unchanged since the 9 percent devaluation done by Mohamed Jaleel in July 2001. With EU in recession, our international reserves at a 15 year low and hajj and holiday season just around the corner for how long Fazeel Najeeb can maintain the value of our rufiyaa at 12.85 a dollar is going to be one of the first major challenges to Nasheed’s government.

The main reason why the peg to the Dollar served us so well in the recent past is because the greenback was on the ventilator for over five years. This automatically offset any pressure on the Rufiyaa resulting from the expansionary policies of the last few years under Gasim while our resorts became cheaper for most of our tourists.

We know that the US economy is in real bad shape but then why has the dollar rebounded? We are often made to believe that Adam Smith’s ‘invisible hand’ which does everything around us but its no secret that for geopolitical reasons the G-8 intervenes to set currency values. G-8 is doing this for primarily for two reasons. Firstly, a large number of G-8 countries have large outstanding exposures to dollar related assets. Secondly, it’s in G-8’s interest to bring down the price of oil. As oil is priced by OPEC in dollars, one smart way of bringing down the price of oil is to let dollar appreciate. Most analysts now believe that the greenback’s value isn’t going to erode in the next two quarters.

What does this mean to us? With the appreciation of the dollar against major currencies, particularly against the Euro, a holiday in the Maldives becomes more expensive to Europeans, four-fifths of our tourists. Fewer tourists are going to be on our beaches substantially reducing the amount of dollars entering MMA. We haven’t seen this happening so far because of the 2-3 quarter lag that’s usually involved in the process. Meanwhile the stock of dollars held by MMA as the Gross International Reserves, currently at only slightly over 2 months of imports, is at 15 year low.

With EU in recession, greenback appreciating and hajj and the holiday season just around the corner, there is little that Fazeel Najeeb and Ali Hashim could do to prevent a devaluation of rufiyaa. I’m sure Nasheed wouldn’t want to see that happen at least during his all important first 100 days in office. So, the only thing his administration could try and do is to delay this painful devaluation by pumping borrowed dollars into the economy. I’m not scaremongering but this looks inevitable now. So, lets brace ourselves!

They are waiting …but President Nasheed isn’t Harry Houdini!

2008-11-12T08:21:00.000-08:00

Mariyam is 34. Her husband, a heroin addict, has had intermittent interactions with her during his time away from the prison sentences to father 8 children from the marriage. She lives along with her 8 children, 4 siblings and mother, in two match box sized slum-like rooms. Her family has been living on the generosity of her distant relatives ever since her father died of heart failure a year ago.

Aishath, still a year short of 30, was married eight times to seven men. Their only remnant in her life is six children whose whereabouts today remain somewhat a mystery to her. I know she is not demented but the last time I heard of her she was in Guraidhoo - her mother has found a clever way of putting her under Govt ‘care’!

Rashid, 43 a Director General in the Government and father of 3 children isn’t the kind of person you would think could end up with a Bank of Maldives ‘lui loan’. He earns slightly over USD2,000 a month from his job and through rental income. But his regular ‘medico-sexual’ trips to Bangkok, weekend ‘masdhathuru’ and daily ‘coffees’ with his friends have now left him with a mounting credit card debt and an outstanding ‘lui loan’ and is now contemplating on running for Majlis!

Rashfa, a 26-year-old graduate in marketing doesn’t find anything wrong with credit card debt and borrowings from her parents. It’s a must for her. That’s because her monthly salary of Rf 6,000 doesn’t even cover half of the expenses she has to incur on her favourite DKNY fragrances and L'Oreal cosmetics and regular shopping sprees on bags and shoes.

Ahmed 23, is voluntarily unemployed for the last 8 months. Being a bright student he got good grades at school but has shied way from a job for his mother finances, from her two-bedroom rented apartment, his daily packet of Marboro and Lavazzas with his friends. A few months ago Dhiraagu disconnected his mother’s phone line after he accumulated a whopping Rf10,000 bill from his overseas calls to his girlfriend in Malaysia.

My brother, a hard working man employed at a private company is living with his school teacher wife, three lovely kids and their maid in a 10x8 sq ft room, at age 38. Not a single flat/goathi round from Hulhumale or Vilingili over the last 10 years have gone without an application from him and his wife.

In spite of former health Minister Ahmed Abdulla’s repeated calls, Shakeeba 27, from Sh. Narudhoo and her 3 children aged between 3-8 do not eat the occasional bunch of banana they get from the ‘keyo feeni’ in their backyard. The good loins from the tuna her cousin Adam brings home also do not form a part of their diet. Only the fish head, badaidhoo, kashifathi and other parts of the fish that has zero commercial value goes into their pot of garudhiya. The good bunch of banana and the loins, sent to Male on board a Kulhudhuffushi boat are the only means to buy the main staples.

I don’t know how many times Haleema was married and how many children she has had. Today, she is in her early 60s and living with her current husband and three generations of her 8 children in a 10x10 sq ft room which is her bedroom, bathroom, living room, kitchen - all in one.

These people aren't fictitious characters. They are true stories of real people (names changed) I know and have blogged about on earlier occasions. There are hundreds of more people out there whose stories aren’t very different from theirs. All of them have hopes and dreams. Expectations are sky high. President Nasheed has just been sworn in and I know he is no Harry Houdini but I just can’t help thinking about what he is going to come up with to meet the expectations from his people.

Obama, Ann Nixon Cooper, Nasheed and my grandmother

2008-11-10T07:05:00.000-08:00

I don’t know if my grandmother Hiyaladaitha, just a year short of 100, living in an impoverished island in the north of Maldives, voted in the Presidential elections in Maldives like Barack Obama’s Ann Nixon Cooper did in Atlanta.

Hiyaladhaitha did not stand for the buses in Montgomery or the hoses in Birmingham, but she was there to witness a generation of fishermen eke out an existence when their fishing boats were torpedoed by the Japanese imperialists. She along with her family and friends endured the hardships of the ‘magoofaiy’ era and saw her island’s population decimated by cholera and chigella three times. She was there to see five generations of her children overcome a myriad of challenges and multiply to 72 today. She was there when a constitution was torn down, a president was brutally beaten to death by a mob and another president who witnessed the Independence of her country derided by state sponsored public protests.

Meanwhile unbeknownst to Hiyaladhaitha, as Barack Obama said in his victory speech in Illinois, a man touched down on the moon, a wall came down in Berlin, and lot of other changes happened in the world. But in her small world of less than 800 people, little has changed. Those lucky few among her 72 offspring had long migrated in search of greener pastures.

Mohamed Nasheed, elected by her second, third and fourth generation children will take his oath as the fourth President of this small country, tomorrow. One thing Hiyaladhaitha, who after a century, through the best of times and the darkest of hours, unlike Ann Nixon Cooper, does not know is if her small country can change. And as Mohamed Nasheed prepares to take charge of the highest office in the country, this third generation son of Hiyaladhaitha, who migrated from that impoverished island 29 years ago as a child, is sitting thousands of miles away from where he was born thinking about how the new President is going to shape this small country for the generations to come.

Running mates and constitutional Voids? It’s the Economy, stupid!

2008-09-16T02:08:00.000-07:00

Lehman Bros has filed for bankruptcy protection and Merrill Lynch had hastily agreed to sell itself to Bank of America Corp. AIG is on the verge of a meltdown. It’s not been long since Bear Sterns collapsed. Fannie and Freddie, dubbed too big to collapse were bailed out a few days ago. Oil, in spite of dropping over 50 percent from the record high July prices, is still hovering around $100.

I have often heard that Americans don’t think of what’s going on in the outside world because their country is simply too large. America is a world in itself. So is Maldives. The entire country is embroiled in debating on things like running mates, PhDs, human rights and constitutional voids! Our politicians and media seem to be blithely ignorant of the biggest events that shape our lives. It’s the economy, stupid!

Thank you President Gayoom…and Happy New Year to you too

2008-01-02T00:24:00.000-08:00

I received my president’s customary New Year card. Just like the 36 odd thousand others in the government of Maldives I receive at least a half dozen of them every year. Every time I receive a card from him I take a few seconds to think about how bad an aesthetic sense he has before tossing it into my bin. I must tell my president that his photography obtrudes upon all my senses in a very unpleasant way.

A Sovereign Wealth Fund of Maldives?

2007-12-30T22:40:00.000-08:00

Many countries seem to be climbing on the bandwagon of Sovereign Wealth Funds (SWFs). Just before Christmas Singapore Temasek took a chunk of Merrill Lynch with an injection of $4.4 billion while the Government of Singapore Investment Corporation (GIC) put in $9.75 billion into the banking giant UBS earlier in the month in the aftermath of the US subprime crisis.

Earlier this year Abu Dhabi’s SWF pumped in $7.5 billion into Citigroup while China’s Investment Corporation took up 9.9 percent of the stakes of Merrill Lynch for a cool $5 billion.
The assets of SWFs today are estimated at $2-3 trillion and Morgan Stanley projects that these funds could reach an incredible $17.5 trillion within just ten years. Among the SWFs what strikes me most are the great strides made by Singapore’s Temasek and GIC. Some pundits put the assets of the two SWFs of this former post-colonial backwater, with no natural resources, in the vicinity of a whopping half a trillion dollars.

A few years ago a cabinet minister mentioned to me that our government was considering the creation of an SWF. I also remember another senior government official telling me that the possibility of investing Dhiraagu’s excess liquidity in the then burgeoning Indian telecom sector was discussed in the cabinet some ten years ago. Had we put in just $10 million - an amount that we could have easily afforded - it would have grown to $100 million today.

I cannot help wonder why Singapore excels at what it does so well while we lag behind grappling with rhetoric such as Islaahee agenda and Unity government. The few times we got adventurous (aviation, at first with PLO and then with Malaysian Helicopters; tea estate buyout by STO in Sri Lanka; Maldives National Oil Company etc) the experiences were so bitter that we prefer to talk about them only in hush-hush. Was there ever a time in independent Singapore’s history when human rights, democracy, and islahee agenda hampered their progress? (for record – I’m not against democracy or human rights)

Who will benefit from Rf 100 million subsidy?

2007-12-29T07:19:00.000-08:00

The Rf 100 million fuel subsidy is not going to make any difference in the lives of our poor fishermen who our Majlis has supposedly intended to help with it.

An IMF working paper based on empirical evidence from five countries (Bolivia, Ghana, Jordan, Mali, and Sri Lanka) concludes that energy subsidies are badly targeted in most developing countries that resort to it ostensibly to protect the poor from the sky high oil prices. Instead of helping the poor, all that energy subsidies do are, according to the study, absorb an increasing share of scarce public resources. IMF’s paper goes on to say that ‘the most efficient and effective way to protect the poor is to allocate some of the budgetary savings from the elimination of fuel subsidies to a well-targeted social safety net that has high coverage of poor households and little leakage to nonpoor households’.

It doesn’t take a doctorate in economics to understand what the Rf 100 million fuel subsidy is going to do to Maldives.

· A huge fiscal drain on an agonizingly overstretched budget
· Badly targeted (its not going to benefit low- and very-low-income households as there will be huge leakages - there’s no way government can prevent the already rich Odiverin and big fishing companies from getting the lions share)
· Crowd-out priority expenditures

If only those bags of wind you and I elected to represent us in Majlis would do a bit of their homework…

How to make loads of Money in Dhivehiraajje

2007-12-28T20:39:00.000-08:00

If you are a Majlis member from the ‘opposition’.

You can sell your ‘budget’ and other big-ticket item votes to Sarukaaru for at least six figures each time. If you play it smart you can be a millionaire even before you are half way through your term.
Get on the stage of opposition rallies a few times and shout as much filth as you can to Gayoom. All that you’ve got to do is to master the vocabulary of Auguraanu. Rest assured, DRP would want to buy you in no time. If you play it a little hard to get and act like a real firebrand, they’ll surely buy you for seven figures plus perks such as a top job in the government and a few memberships in boards of Government companies.

If you are a Majlis member from DRP.

Threaten to resign from the government and join MDP. You are sure to leapfrog to at least a deputy minister’s rank and get an ‘Atholhu fihaara’ or a ‘Cresent fihaara’ for just a few thousand Rufiyaa which you can then rent out to an Addu businessman for a whopping 60,000 a month. You might also get your hospital lease extended for another 15 years without having to for a public tender.
Make DRP Zaeem feel that you are among the elite few that have the balls to take the opposition rabblerousers head-on. Zaeem will soon offer you a cabinet portfolio and you’ll have a lovely seven figure bank balance before you even realize it.

If you are a resort owner or a businessman

Wriggle your way to a majlis seat of an atoll through trickery and bribe. Those island folks will sell their vote for Rf 50 and to get elected you need an investment of a few hundred thousand. But once you have a seat you’d soon learn of ways to coerce government through the use of judiciary to give you a resort for a small nominal fee or award lucrative contracts that will pay off your investment in a matter of weeks.
Become a protégé of a half-brother of the president. He will then create lots of business opportunities for you such as opportunities to become JV partners of state owned enterprises.

If you are an unemployed, half-literate, wannabe rags-to-riches type

Start paddling drugs - there’s a ready market and if you play your cards right - c’mon you know how your friends do it - you can be in business with virtual impunity. Before you realize you will be on your way to making loads of money.
Get those grade something dropouts around your neighborhood to form a ‘gang’. You can use this gang to lend a hand to the Izzaiytherin in the government and the opposition to run those little ploys that they need from time to time. Pays very handsomely.

Who is this fart?

2007-12-07T05:01:00.000-08:00

Gang violence is rampant. Drugs culture has assumed almost epidemic proportions. Theft, mugging and burglary have become an everyday event in our lives. And this sleazy old fart that is supposedly in charge of our police and home ministry goes on TV and talks about Newton. Lobi dho!

Maldives - World Number One!

2007-12-06T23:20:00.000-08:00

Maldives is ranked number one in a list of 178 countries ranked by the World Bank in its list ‘who makes paying taxes easy and who does not’. We have even beaten Singapore (number 2 on the list).

It also says that “the Maldives levies only one small tax on domestic business in the manufacturing sector (the property transfer tax) and only hotels and banks are taxed on their profits.”

In spite of my innate patriotic urge to take pride in World Bank’s conclusions, I have serious reservations as to the accuracy of the World Bank’s assessment and the veracity of the statement above. I think our small country has one of the most ambiguous and haphazard tax regimes anywhere in the world (correct me if I’m wrong). Have a look at MEDT’s Royalty charges on foreign investments and see if you could make any sense out of it. To me this is clearly an attempt to drape a grim reality with misleading nomenclature – a royalty = a tax? Of course NO! If it was, we wouldn’t be telling the world that we have zero corporate profit taxes (with the exception of the banks, of course).

Regarding the World Banks’ statement above on profit taxes, I don’t know of any hotel in the Maldives that is taxed on its profit (again, correct me if I’m wrong).

Incidentally, not too long ago, we were on an OECD’s list of uncooperative tax jurisdictions. But OECD subsequently removed us from their list without us having to do anything to our tax regime. Thanks to yet another important act that we as a nation have perfected during the last couple of years – the art of hoodwinking the white men!

Where have all the doctors gone?

2007-11-22T05:19:00.000-08:00

My friend Hilath calls the Maldives a ‘failed state’ and describes it as ‘terminally ill’. I’m not being cynical but I cannot think of too many reasons to disagree with him.

In spite of the level of unprecedented growth we have had over the last three decades, a large number of our people, especially the folks from the islands, live in a state that cannot be described as something very far from abject poverty. The efficacy of our government machinery (despite its disproportionately large size) to improve on its performance that many would describe as nothing short of dismal, even in the most essential areas of our lives such as basic housing, education, health facilities etc remain seriously questionable. The statement Dr. Ahmed Shaheed made about the failure of our Majlis just before he resigned from Government is probably the most glaring truth he ever spoke in his entire lifetime. Malé, heaving with over 120,000 people, is more of a spawning ground for all sorts of social ills than a capital city. The few institutions (including the very basic institution of family) that this country have are all on the verge of collapse. Civil society is virtually non-existent in this country. The only viable industry we have is run by a small cartel of thugs who have now artfully wheedled their way into our Majlis to make ‘Rayyithunnah faidhaahuri’ decisions for us based on ‘democratic principles’.

The truth is whether you and I like it or not this country really is ‘terminally ill’. But the irony is that in our small country we have so many people who call themselves ‘doctors’ – the PhDs. They are everywhere. You can find a half a dozen of them in every government ministry. But none of our ‘doctors’ seem to be doing anything about this ‘terminally ill’ patient.

When your eyes are bigger than your wallet

2007-11-20T19:24:00.001-08:00

Rashfa, a 26-year-old graduate in marketing doesn’t find anything wrong with credit card debt and borrowings from her parents. It’s a must for her. That’s because her monthly salary of Rf 6,000 doesn’t even cover half of the expenses she has to incur on her favourite DKNY fragrances, L'Oreal and Lancome cosmetics and regular shopping sprees on bags and shoes.

Rashid, 43 a Director General in the Government and father of 3 children isn’t the kind of person you would think could end up with a RF15,000 ‘lui loan’ from Bank of Maldives. He earns slightly over USD2,000 a month from his job and through rental income. But his regular ‘medical trips’ to Bangkok, weekend ‘masdhathuru’ and daily ‘coffees’ with his friends have left him with little choice. He now has over two thousand dollars of credit card debt and an outstanding ‘lui loan’.

My friend Ahmed 28, earns less than a third of what I earn. Yet, he has a brand new HondaWave 125, an iPhone and several other gizmos and gadgets that I cannot afford even if I had the desire to buy them. He financed his Wave from Sheesha and paid for his iPhone using his brother’s credit card. Its been two months since Dhiraagu disconnected his phone line after he accumulated a whopping Rf10,000 bill from his overseas calls to his girlfriend in Malaysia.

All debt aren’t necessarily bad. We all need to borrow for various reasons. But in a society that doesn’t have mechanisms for debt funded investments like buying properties, credit is used only to buy consumer goods and luxuries, leaving nothing but bills…and more bills. We hope that our incomes will increase enough to pay the bills. But with inflation edging up to almost double digits it cannot be counted on. For most of us, average wages, after adjustment for inflation, would in fact go down.

Maldives to appear on Guinness soon!

2007-11-19T20:27:00.000-08:00

The folks at Guinness world records probably don’t know this yet – but I have a strong feeling that we will soon make it to their list as the world’s biggest government. My curiosity and obsession with frivolous things in our small country led me to compile the statistics below from the veringe list on information ministry’s website.

Ministers and officials in the same level 36
State Ministers 12
Deputy Ministers 46
Executive Directors (includes Atoll chief, DEDs, AEDs 65
Atoll Chiefs 18
Director Generals (including Deputy DGs and Assistant DGs) 210
Directors (including DDs and ADs) 1368
Asst und sec 1153
Total Number of Verin (excluding the guys from MNDF and Police) 2,926

I had a look at figures from some familiar countries too. Sri Lanka with 87 ministers and 20 deputy ministers and Kenya with 33 ministers and 50 assistant ministers would probably be our closest rivals. But considering their populations of over 20 million and 35 million respectively, they are not real competition to us. New Zealand and UK incidentally have 21 and 27 (including non-cabinet members) ministers respectively.

Looking at industry, Deutsche Post (integrated with DHL and Postbank), the second largest employer in the world with over 500,000 employees and operating in more than 220 countries and territories is managed by a board of management comprising of only 7 members. Perhaps the guys at Deutsche Post could learn a thing or two to learn from us about bigwigs, corporate hierarchies and organization structures.

Pension and social security – another monster about to show its ugly head!

2007-11-17T01:22:00.000-08:00

Unlike in most other countries Maldives had its baby boom during the late 60s, 70s and early 80s. With our life expectancies almost reaching levels which are comparable to much of the developed world, in another 20 -30 years time we would have a relatively large number of people in their 60s and 70s. Is anybody thinking about this? (I bolg about this because I feel the pain!)

The non-contributory pension scheme that we have for our govt staff which pays 50% of the basic salary after every 20 years (keekey dhen bunaanee? Maldives in the only country I know that pays ‘double pensions’ and ‘triple pensions’) of service regardless of age. The pensions are not indexed meaning the ‘handoo, hakuru, fuh and mas’ we can buy with it are decreasing every day. As we don’t have a mandatory retirement age govt continues paying ‘pensions’ to a number of civil servants until they die. This practice is clearly unsustainable (World Bank report on Maldives’ pension reform). Many govt employees even in their thirties are already earning pensions and with our life expectancies at its present level, they have clearly at least another 30-40 years to live during which they could earn another one or two ‘pensions’ - a huge fiscal burden in another 5-10 years time.

The other major problem is that we have no safety net for this burgeoning elderly population. With increased incidence of major health ailments such as heart diseases together with the increased life expectancy, our people remain extremely vulnerable as most people in the country does not have any safeguard such a pension plan, retirement plan, health insurance plan etc against any unforeseen circumstances.

Our govt probably finds the ‘political cost’ of attempting to overhaul the existing ‘seemingly generous pension scheme’ to be devastating. After all, who in the govt would want to do away with a plan that pays ‘pension every 20 years’ without ever having to contribute anything towards financing it, during their working life? Procrastinating decisions that one finds painful doesn’t provide a solution to the problem – it only aggravates it. Our pension and social security is one goddamned ugly hydra that’s about to surface in less than 10 years!

Maldives caught in another diplomatic row?

2007-11-12T19:44:00.000-08:00

“Several of the fugitives, as well as some of the suspects detained in the Maldives, received training in bomb making in Pakistani madrassas”, said a Maldives police spokesman in an interview to BBC (Nov 8, 2007). Following the Maldives’ police allegation, a Pakistan High Commission official said he is “disappointed and saddened by the allegations that terror suspects were trained in Pakistan”.

Earlier this year Imad Solih, a presidential appointee to the Special Majlis raised controversy when he referred to Indian parliamentarians as ‘rapists and murderers’. Indian High Commission dispelled Solih’s comments saying “this was an uneducated and superficial viewpoint”. (I think we were in fact very lucky to have avoided a major diplomatic row - thanks to the Indian govt for understanding how ‘uneducated and superficial’ we are)

In 1983 President Gayoom himself was caught in a similar diplomatic quandary when he made a public speech claiming Maliku (minicoy island) for the Maldives.

Our neighbours are a little too big and powerful for us to be making statements that could be repulsive to them. After all, India and Pakistan both armed with nukes are among the most populous countries in the world. We are lucky that they understand how infinitesimally insignificant we are compared to them in the overall geopolitical scheme of world affairs. So, don’t you think it is in the interest of our country to keep our jingoistic urges in check?

The biggest red herring in Maldivian politics

2007-11-11T23:20:00.000-08:00

Almost everything in politics, throughout the world are designed to either divert attention away from or to steal unjustified limelight to something that political powerbrokers want. And our small country is no exception. Laws are drafted and enacted; institutions created and disbanded; people appointed and removed to and from high offices; policies and strategies formulated, announced, implemented and their courses altered – all done to achieve this end.

Earlier this year when President’s powerful half-brother Yamin resigned from cabinet, I (not only me…several other Maldivians were also hoodwinked) believed, for a while, that he must have actually fallen out with the President. But after having observed the developments in PA, DRP and the Government over the last six months I became increasingly dubious that Yamin really did defect. I now believe that it was in fact a calculated and carefully orchestrated move to secure more economic and political grounds. My dubiety finally got sealed with the recent controversies surrounding ‘Biyaadhoo compensation’ by both the Govt and Yacht Tours owner, PA’s Jabir. Why has govt been so obsequiously currying favour to Jabir’s every demand? Why has DRP not taken any action against PA members in spite of everything that has happened? Why are people linked to PA still able to exercise so much control over virtually every affair of the govt? Why has Dhiyana continued to be a Presidential member in spite of her alleged moves against the party? And an awful lot of other answered questions make Yamin’s perceived defection the biggest red herring ever thrown by President Gayoom.

My Govt never fails to surprise me!

2007-11-10T01:35:00.000-08:00

During the 1980s when Male was literally besieged by the sudden influx of 'raajethereymeehun' arriving in search of better lives and perceived wealth, my government came up with kudasitee (a kind of a visa regime); Port commission and reclamation of Male; decentralization; Selected Islands Development Programme and later on with Vilingili and Hulhumale development.

When our economy appeared to be in dire straits my government shocked international donor agencies (and of course me..) with a budget that’s exactly the same as our GDP; the expansion of tourism to all the atolls, MTDC, AIM; development of airports all over the archipelago; a transshipment port valued at a third of our GDP; Gulhifalhu project and a whole lot of other projects.

When the country was beset by calls for reform both from domestic and international sources in the aftermath of the murder of Evan Naseem, my govt completely bewildered me with MDP, DRP, IDP, Adaalath; furathama badalu, Police Integrity Commission, Human Rights Commission, reform agenda, Roadmap, all party talks and a whole lot of other difficult-to-understand vocabulary, phrases and institutions.

Just last week while the country is on the path of an economic meltdown (I believe another devaluation of Rf is inevitable within a year if fiscal discipline is not brought in - with record high oil prices reigning in inflation in another major challenge) my govt utterly baffled me with the announcement of an unprecedented raise in salaries of over 36,000 govt employees and free text books and fees for students!

Maldivians are the Brainiest and finest looking people in Asia!

2007-11-03T23:17:00.000-07:00

Simon Sahreef in his blog http://www.randomreflexions.com/, says “someone pointed out in one of the comments on this blog that Maldivians were the brainiest people in Asia. There is a lot of truth to this claim.”

Just two years ago I remember reading an extended article on the Aafathis which started with the sentence ‘Ceylon meehunaa khilaafah dhivehinnakee gaige hangaduge kula madu badhan kula akah dhaa sifa reethi baekeve.’ When a child is born aunts, uncles, brothers and sisters all line up to see if it is 'fair' - 'ey baby dhontha?'

All tribes, clans and nations have an instinctive tendency to believe in the supremacy of their genetic stock, appearance and intelligence. But I sometimes wonder if we Maldivians are not taking this a little too far. For us, Srilankans are ‘orin’; Indians are ‘indiaa meeheh (pronounced in a very demeaning and derogatory tone); Bangaldeshis are ‘bangaalheen (almost a subhuman species). Years ago while in my seventh standard, I learnt from my ‘social studies’ text book that we Maldivians are ‘Aryans’. Several Maldivians including senior figures among politicians and civil society have on several occasions bald-facedly declared that we are brainiest lot in the region.

Most Maldivans that I know stand only a few inches taller than 5feet and show no visible signs of blonde hair or blue eyes - physical features of Hitler’s Aryan race. No Maldivian I know have published even a well recognized scientific article let alone making new scientific discovery. I can never think, even in my wildest dreams, the day a Maldivian would earn international recognition as an authority in any academic field.

Let’s accept the reality. We are juvenile-tuna-harvesting Austroloids and Dravidians slightly dwarfed by several hundred years of malnutrition that learnt even their ‘ABCs’ from Srilankans during the 1960s. Greek gods would have no reason to be envious of our looks and Einstein wouldn’t have definitely raised an eyebrow even if we could all combine our brains. So instead of arrogating to ourselves qualities that we don’t have, lets accept the reality and brace ourselves for the long and arduous task ahead of us before we could even start thinking about calling ourselves a civilized nation.

Deputy Ministers, Executive Directors & Director Generals – a dime a dozen!

2007-11-02T00:13:00.000-07:00

Deputy Ministers, Executive Directors, Director Generals and a whole lot of other formidable appointments are frivolously being made everyday by our government. Not a week goes by without half a dozen new difficult-to-pronounce titles being added to the already disproportionately top-heavy civil service. I skimmed through the ‘veringe’ list on Information Ministry’s website today and was horrified by both the enormity of the top cadre of our civil service and the ‘exalted’ nature of the titles. Some ministries have at least a couple of deputy ministers and several executive directors and director generals.

I of course recognize quite a lot of the names in the ‘veringe’ list. Some of them were my former classmates, friends, and boys and girls I tutored not long ago. Some of these top civil servants took 20 years or more to reach where they are today while for others it’s a matter of leapfrogging up the ladder within less than five years. In any organization or culture there are competent, hardworking and sharp-witted people who move up the ladder quickly. I don’t know the basis for Maldivian government’s promotions - perhaps Maairaskalaange and our authorities would know. But one thing I’m absolutely certain is that in our government’s hierarchy, neither competency nor intelligence seems to be the underlying reason for these incredibly comical promotions.

Let me give you an example. I was utterly flabbergasted by the news of the appointment of a young man to the post of ‘Commissioner of Legal Reform’. Maybe this is just plain jealousy but someone who has just a basic degree in law and paper-pushing-experience at a government office does not suit my notion of a ‘Commissioner of Legal Reform’. No ill-will intnded towards the good young man.

I’ve met ‘commissioners’ from other countries. I’ve talked to their ‘Director Generals’. They are mostly the type of top class people whose presence and vast knowledge in their respective fields makes you feel humbled. These titles are the culmination of illustrious and extremely distinguished careers. They are not everywhere - and definitely don’t come a dime a dozen.

In countries several times larger than us, they have only a handful of these titles. But it baffles and hurts me to even think about why we need so many of them in our government. The bottom-line is do we have the resources to support this? Tell me.

Memories from a UNDP trip

2007-10-21T02:21:00.000-07:00

Shakeeba Ali, 27, from the impoverished island of Sh. Narudhoo and her 3 children aged between 3-8 do not eat the occasional bunch of banana they get from the ‘keyo feeni’ in their backyard. The good loins from the skipjack tuna Ahmed Adam’s cousin’s boat catches depending on the season also does not form a part of the diet of Ahmed Adam, 38, from Sh. Feydhoo and his family of 5 children and his wife. Only the fish head, badaidhoo, kashifathi and other parts of the fish that has zero commercial value goes into their pot of garudhiya. I wondered why. Our government supported by organizations such as UNDP among others, have been urging our people to eat good food for ages. How could these islanders still continue to be so ignorant and not heed to the good advice given to them?

I asked both Shakeeba and Ahmed why they have opted not to eat the finest food they have access to. That’s not because I didn’t know the answer. I only wanted to confirm something I had always known - the few bunches of bananas and smoked tuna loins contribute substantially to the little income they have and with that meager income they both needed to buy rice, flour and sugar.

Both Shakeeba and Ahmed have been living a life of sustenance just like the way their people had lived for generations. They had few complaints. They seem generally content with their life. They don’t have to think about the upcoming refinancing for their resort from their Singapore based banker. They dont either have to think about concocting their next big lie needed for the upcoming Majlis session. They even don’t have think about ‘child malnutrition’, ‘poverty alleviation’ and ‘Gini coefficient’ and other difficult to pronounce and abstruse terms that our government officials and donor agencies seem to understand like the back of their hands. Happy people they are.

On vilivaru and Biyadhoo...

2007-10-18T08:02:00.000-07:00

Hiriga (Haveeru Online 18th October 2007) is absolutely right about Vilivaru and Biyadhoo. You and I didn’t go to Lincoln’s Inn. But we also know that our government has absolutely no legal basis for deciding to compensate Yacht Tours Maldives (no ill-will intended to the company or its owners) simply because the government’s team in its report concluded the company ‘had an opportunity to win the bid’. Hiriga has done a marvelous job with presenting his arguments on the case very succinctly. So, I’m not doing that.

If ‘opportunity to win the bid’ really is a basis for a sovereign government to compensate one of the richest companies in its country then I can’t think of anything more outlandish than that. To add to the pain is also the fact that this decision comes at a time when the government is stretched to the limit in the management of its public finances. You might say that I'm exaggerating if I say that our central bank and Finance ministry are bordering on bankruptcy but please see MMA’s monthly stats. So, this decision defies all logic, reason, moral and ethical standards.

Sigh!! I’m not running our government. So, I obviously can’t do anything about it. But I wish instead of compensating Yacht Tours, our government had decided to compensate:

The 10,000 odd people who are registered on Municipality ‘dhaftharu’ who had waited several years for a place to live.
The thousands of people who are forced to live like packed sardines in matchbox sized rooms in Male.
The thousands of 'rajjetherey' people who migrated to Male in search of emplyment, education and basis health services. They've been paying the riculously exorbitant Male rents with their arms and legs for years.
The hundreds of people who 3 years after the tsunami are still living in ‘vaguthee hiya’
The 30 odd thousand civil servants for the meager wages they had received for several years.
The several thousand people in outer islands for having to live without access to proper healthcare, education, housing and a means to generate any income at all.

Xenophobia – what’s the cost?

2007-06-22T03:59:00.000-07:00

‘They will colonize us… invade us...enslave our children and their children, eat the juvenile tuna swimming in our seas, take over our resorts and preach Christianity, Judaism, Buddhism and a whole of other ‘isms’ to our children to the extent that they will completely obliterate even the last bastion of ‘iman’ within us’. For more than one reason, I believe that this thought is almost ubiquitous in our country - its there in the papers, the harangue of our politicians, our Friday sermons and our Majlis debates.

C’mon, wait a gosh darn second. Who wants to colonize us? Who wants to invade us? Who wants to preach the ‘sms’ to us? The answer is NO ONE. (I’d like to remind you again that I’m someone with very average cognitive powers).

I think as a nation we’ve paid already paid a huge price for this ‘xenophobia’ thingy. My father was unable to learn the language I’m bogging now because the authorities back then made him and our people believe that learning this ‘faranjee / vilaathu’ language would make him a ‘kafir’. Our policy makers haven’t been able to debate on the issue of 99 year resort leases only because of their ‘xenophobia’. It is also one primary reason why we have lagged behind in our legislative, judicial, political and civil society developments. We haven’t been able to open up our country to foreign investments (I’m talking about a number of legislative and regulatory bottlenecks here) like several other countries have done also because of our fear of foreigners. We’ve been pussy-footing on several important economic reforms and liberalization of a number of areas for FDI for the same reason. I know I don’t need to remind you here about all that Dubai has done and the economic benefits they are reaping from their openness to foreigners.

Maldives - without an army?

2007-06-20T00:13:00.000-07:00

We've all been observing stark criticisms of the institutions of our Army and police for a while. As we spend about 6-8 Laari out of every Rufiyaa we get on these, it is definitely bound to be a cause of concern for a lot of us. But then these are very important institutions for a country. So, how can you do away with them? After all they are there to defend our nation and safeguard our public safety. How can we even think of going on as a nation without an army?

How many states in the world are able to maintain their nationhood and sovereignty without an army? Liechtenstein, (a principality – well, is it very different from a sovereign country?) the richest country in Europe with a per capita income of US 54 thousand doesn’t have one. Mauritius, located not very far from us, with a population of 1.2 million people and per capita income of USD 3,700 doesn’t have one either. Iceland, (which incidentally has a population the size of Maldives) the fifth richest country in the world in terms of per capita income also does not have an army. Some other countries that do not have armies are Andorra, Costa Rica, Dominica, Kiribati, Marshall islands, Micronesia, Monaco, Nauru, Palau, Panama, St Kitts and Nevis, St. Lucia, Samoa, San Marino, Solomon islands, Tuvalu, Vanuatu and Vatican city.

Now, I’m asking myself this question. Could the Maldives continue to be a nation if we were to do away with the institution we call our army? This is perhaps an issue we should open for a public discussion.

Aliens? How prepared are we for them?

2006-03-23T01:46:00.000-08:00

“Alhamenge Islaamee killaagai rendhu alhuvaalan ulhey ulhunthah nethi kuravvaa faandheyve” I thought a little about what the Imam was saying as I waited under the shade of the big gofi-eley tree in front of Islaamee marukazu. I looked around at the lanky youths (parteys?) clad in Billabong and Bodyglove T-shirts around me and wondered what they could be thinking about. They don’t even seem to be listening to what the Imam was chanting. Surely they couldn’t be thinking about the “islaamee killa” or the “rendhu” even if they heard what he said.

They are a very different group of people. They grew up eating pizza and sitting in front of TV and computer screens vigorously moving their thumbs. I am sure few of them ever saw a ‘mainnah fennudhey soofi’ or was stung by a ‘gaaviha mas’. I am also very much sure that they neither had a single spoonful of ‘antipaa’ nor did they rote any of the ‘dharus’ from ‘Thauleem Dhiyana’ in their childhoods.

At ten years of difference in age, for me these people seem to actually belong to a different evolutionary phase. They talk and think in a language I cannot fully understand. Had it not been for my good tech-savvy friend I would still be thinking a blog is something you get in your throat when you wake up in one of those stuffy-nose mornings. If I happen to be so ignorant about them I wonder how much apeople in their sixties or seventies would know about them. (I’m in now way comparing myself, a man with average cognitive powers to someone with a surprisingly advanced mental faculty)

They are the majority in this country. But the closest people to these little understood beings - those approaching their 30s or already counting their 30s and going into 40s even seem to understand them very little. They seem to have come out of nowhere to a country little prepared for them. I for one person don’t know what this country is going to do with them? Do we have space in our already overcrowded matchbox sized rooms for them? Do we have space for another ten thousand Sheesha-credit-financed Honda motorbikes on our roads? How many of the ten thousand ‘GCE O/A’ level graduates can we absorb into our cash-crunched and ready-to-burst civil service? What are we going to do when they start multiplying in the next few years? Are we going to count on the golden-egg-laying-chicken for money and the over four thousand Rufiyaa per square foot Hulhumale ‘row house’ for space?

Seeking answers for questions such as these seem to be of little importance to the people at the helm of this small country. They continue to speak and think in their own language – the language of ‘islaamee killa’ and ‘rendhu’. This is the same language they spoke when my father went to ‘Dhaarul Iqaamaa” to study Ahmed Kamil Didi’s poetry. Unfortunately, their language and thinking has since become almost defunct among today’s Maldivians and has lost its meaning and application in the lives of the majority of the people in this country now. Now, don’t get me wrong. I’m not against preaching Islam in this country. All that I’m saying is that it’s time that we talk and think in their language about ‘cool stuff’ that has meaning and application in their lives.

Where you and your friend are equal

2006-03-19T20:33:00.000-08:00

He is a Beyfulhu (Brahmin?). You are a commoner. He is rich and educated. You are not rich and not ignorant. His ego shouts a big ‘Ouch!’ if he talks to you in Beyfulhu Dhivehi. He also somehow feels it is inappropriate to talk to you like ‘aharen’ and ‘kaley’. You belch at the thought of talking to him like ‘aadhe’ and ‘vidhaalhuvey’. You both decide to make things a bit easier for each other and start talking English (yes, some of those tongue twisters are real tough for a tongue, used to Dhivehi).

The slum dwellers of Male

2006-03-07T01:09:00.000-08:00

She must be still a few months away from 28, but she was married at least eight times to seven men. These men came and left her life for reasons little known to anyone except Maaiy Raskalaange and her mother - a sixty something, arms-akimbo-fishwife type woman. Their vestige in her life was six children whose whereabouts still remain somewhat a mystery to her. Although she had her schooling only up to grade 6, she is not mentally challenged. A friend of your author sometimes gets to answer phone calls she makes to a distant relative from the Centre for the mentally challenged in Guraidhoo – yes, that is where she is staying now. She is definitely not demented but her mother has somehow managed to convince the Ministry officials that she indeed is – ostensibly in an attempt to get rid of her!

Another distant relative of your author’s someone, is 31. Her husband, a heroin addict has had intermittent interactions with her during his time away from the prison sentences to father 8 children from the marriage. She lives along with her 8 children with her mother and her 4 children, fathered by two different men, in two match box sized slum-like rooms.

These are true stories of real people just like you. It is little wonder that rhetoric like “furathama badhalu”, “magu chart” and “islaahee agenda” has little appeal to them.

How do I get a FRIEND everywhere???

2006-03-05T01:55:00.000-08:00

You lost your driving license today. You call up transport ministry...you will be lucky not to get your phone disconnected while your call gets tossed around among the countless number of girls sitting at the counter before you get the right person online. Then you tell him you have lost you driving license. He says that you need to fill up an LR01 form (how did I get that number?) and submit to the Ministry. You go to Novelty bookshop, get a form and then discover that you have to get a small part of the form filled by Sifainge. You go to Sifainge…if you are lucky to have a friend there you can get their Thaggadu on your form in less than half an hour (if not you might have to sit there for a few hours). Now it’s time for you to go to Transport Ministry. You know so well that it’s going to take your whole day. So you call your friend working at a govt office in Huravee building to see if he has a friend at Transport ministry. Then your good FRIEND somehow locates his distant cousin who happens to have a difficult to pronounce title at the Ministry. You got to see him and he sends one of the girls to collect your form. After a day or two your new friend at the transport ministry calls you to say that your license is ready.

Your uncle has a swollen ankle. You decide to get an appointment with an orthopedic surgeon at IGMH. You call IGMH to get your ‘number’ and the girl on the phone says there are no ‘numbers’ available for another week. If you happen to be a close acquaintance of a Majlis member from Noonu atoll or if your FRIEND knows a someone who was caught a few years ago while engaging in lewd conduct at the office of the Islaamee Kanthah Thakaa Behey Special Majlis, you can get a special ‘number’ to see the orthopedic guy.

Your mother wants to add a room to her 180sq foot housing plot. The only way to go is up. She asks you to get your architect friend to do a drawing for her that she then submits to the Ministry of Housing and Urban Development. They say that the signature of the architect is missing in your drawing. You then get your architect to sign it and then submit your drawing. Ministry says you need a copy of the registry of your goathi. You rush home and get a copy and then run to submit it to the Ministry to find out that they also need a copy of the identity card of your mother. After several days of running to the Ministry you decide that it is impossible to get the approval you need since you don’t have a FRIEND at the Ministry. Then you go out and hire two of Bangladeshi labourers and a Maldivian raanaa man and get your job done without the approval form the Ministry.

Your sister just graduated a month ago. You received a call from the Airport to say that you have received some cargo - some stuff your sister sent through air freight before she arrived. Knowing the kind of trouble you will definitely run into, you take a leave from work and go to the airport early morning to get your cargo cleared. After several hours of filling forms and running in between Airport, Customs and Sifainge guys you finally arrive home at 4.30 in the afternoon. You decide that it’s high time you get a FRIEND in every Government Office!

My civil servant colleague was a 2nd World War POW

2006-03-01T01:50:00.000-08:00

I'm really serious about this - my colleague was a 2nd World War POW and he is still 'serving' the Government of Maldives. He must be nearing his third pension now.

I wonder if there is any country out there in the world that gives two or three pensions to civil servants. The other day I happened to be going through a report prepared by World Bank on pension reform in the Maldives. Im i'm not mistaken I think they suggest that mandatory retirement be introduced at age 65 in our small country's civil service. I wonder what would happen to all those fossilized 'wafaatheri and ikhlaas thri' civil servants, including my collegue the 2nd World War POW if Gayoom decides to do as the World Bank team says.

Mein Kempf to open an HSBC Bank Account

2006-03-01T01:34:00.000-08:00

My someone wanted to open a dollar account at HSBC, Male. I was thinking of opening this account as a joint account that I could also operate. I went to MTCC tower 1st floor asked asked the Srilankan gentleman at the counter where I could get an application form. The nice Srilankan gentleman pointed towards another nice young lady sitting at another desk. I waited sometime for the Sri Lankan family sitting in front of her to finish their business before she was able to give me an application form.

I rushed home to get this form filled and to get copies of the required documents. As I had some questions regarding the form and my intended account, I wanted to clarify these issues from HSBC before I submit my application form. To my utter shock and absolute disbelief the application form had no contact details whatsoever. All that it says is HSBC – the world’s Local Bank! I guess since the bank claims to be so LOCAL, the bank simply assumes that everybody would know their numbers. I didn’t stop there – called 110 got HSBC’s number and contacted the nice young lady twice to clarify the issues.

As HSBC would not take a Cheque from my Bank of Maldives account I went to BML and bought dollars to get US Dollars in Cash. I quickly went to HSBC and met the young lady at the counter. She took my form and typed a few numbers on her keyboard and after a while told me I would need copies of my wife’s and my passport and national identity card. I produced my wife’s original passport and my national ID card and asked her if these documents would not suffice. She insisted that I should submit copies of all the documents. I said yeah, OK, but if that is your requirement you should clearly give a list of all the documents all prospective account holders are required to submit at the time of opening accounts and you should also have at least your contact details on your application forms. (note: since when did Maldivians start giving consultancy to Fortune 500 companies? he he). I asked her whether she would need any other documents. She thought for a moment and said that both my wife and I are also required to submit letters from our respective employers saying some very nice cute things about ourselves (I don’t remember exactly what she said) and the salary we get! WOW, I said to myself “Thank You Very Much HSBC!”

Long ago I have come to terms with one big reality of life in the Maldives - getting things done from Maldivian Government Offices is one hell of a difficult job full of not so pleasant surprises. I guess HSBC is no different when it’s in the Maldives. It should come as no surprise to anyone as we are the small nation teaching the world ‘the art of doing nothing’.

After an intervention from an influential friend (I dint ask him to intervene because I dont believe in getting things done thru interventions) I was finally able to open my account at the World's local bank.

Shawn says that months ago he was also thinking of opening an account at the World's local bank. But while going thru the banks KYC (what bankers call Know Your Customer)he lost interest(I wonder if they asked him to produce a copy of his great grandma's marriage certificate). He still lives his miserable life without an account at the World's Local Bank.

Which HOUSE are you from?

2006-02-28T21:51:00.000-08:00

“….kon ge eh tho? Alhugadu maaragalhakah nudhannamey”, asked my client - a businessman from an aristocratic Male’ family in his mid 40s. I instinctively knew what he was referring to – he was obviously not interested in my address of course – rather he wanted to know which island I was from. Am I going to say I’m from the House of Windsor, the House of Tsar or the House of Dhiyamighili?, I thought for a moment. On second thought I didn’t want to lose my client so I told him both my parents came from small impoverished islands in the north and I grew up as a street kid on the streets of Male.

I wonder what it would be like if Orchidmaage, Kaamineege, Love Nest and Broken Heart were all given street numbers. Would a lot of people lose their identity? M. Alivaage is a small part of the identity of Minister Ilyas Ibrahim, and Male Municipality Dhaftharu no. 11023 could be the only identity of another Ilyas Ibrahim who migrated to Male’ from G.Dh Fiyori some 23 years ago in search of a better life. Back then islanders were required to get a Visa to stay in Male and my friend Ilyas would have certainly had a tough time getting through the paperwork of kuda sitee office. Ilyas, must have gone into all that trouble to get himself identified by a mysterious Male Municipality Dhaftharu number some 23 years later!

Getting a Loan from Bank of Maldives?

2006-02-28T01:15:00.000-08:00

The Government of Maldives brags a lot about how the cost of funds has come down in this country. Has it really come down? Im note sure. Go to Bank of Maldives to get a loan. They will say that your interest rate would be between 10-11 percent. If you are not among the big fishes they will take at least two or even sometime three times the value of your proposed loan as collateral (they will only take physical collateral such as houses and boats). Then they ask you to insure your property i.e; collateral. They will also ask you to pay an arrangement fee of one percent to the bank. Then they will ask the loan agreement to be registered with the bank. To do this you need to buy revenue stamp (thats another 0.5 percent of the loan). Now do your math and calculate your cost of funds!

I forgot to mention - deposit rates used to be as high as 4-6 percent until recently. Now they have brought it down to 1.5 - 2 percent.