The question of ‘rich pickings’ in the Maldives

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??!!

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! ;-)

Launching my humble ‘Artwork’ Blog

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’

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?

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

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?

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’

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?

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.

Just a day’s headlines

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”.