Ever wondered what is meant by the Maldivian Way of doing things? Let me try highlight a few pointers on some of the things that have stood the test of time!
I did experience an era in which most of us lived in some sort of poverty. An era where you get a fully rationed biskoadhu and a cup of tea for breakfast. An era where you had only one uniform to wear for school. But before long, even I as a kid started experiencing the fair share of luxury from Gold Cup boots (to be worn at school) to riding the best of Motor Cycles. Lets have a look at some of the things that are significant enough to form the very basis of my initial question.
First there was Giffili which we obviously have had the negative experiences. When the so called faahaana came to the picture, every house invested on more than what was required. Every room needed an attached toilet!
I remember the times when I used to go to the house next door to make fone calls when Dhiraagu for the first time introduced the fone service. Once again before long, every individual ended up with a number of their own.
Television shared the same story. Its not only the sitting rooms that required a television, but most bed rooms had to have a television of its own. Probably the early 1990s saw the introduction of satellite channels, that black Dish that was the wholemark of every roof in male! No matter how rich or how poor you were, it soon became a basic necessity!
Late 1990s saw the coming of Mobile phones to the market. Every Maldivian, big or small, male or female, had to carry one in their pockets. And stop me if I am wrong, whether you earned a few hundred rufiyaa, you still claimed that you could afford those luxuries! A look at today reveals that, way before apple introduced its iPhone, most Maldivians had one in their pockets! Well … that’s a bit of an exaggeration, but you got the point right?
Look at the role of taxis in Male. Ofcourse it is a tiny little island but then again you couldn’t go from Henvieru to Maafannu on your foot! It has to be the taxi! What a way to live a life.
Add to this list how some of us spend weekends in Sri Lanka, buys flat screen televisions, wears a tag or another expensive watch, takes breakfast in café’s or perhaps can afford to pay Mrf40-50 for a coffee two or three times a day!
Living life in Male aint for the faint hearted for sure. Even world renowned economists wouldn’t have a clue of how the Maldivians function! They’d be amazed by what we do with what we earn!
I know that the list could go on and on and on. I am sure you’d have many more to add to the above list. Before I pen-off, lets have a look at what we have done as a nation to see whether we can depict any similarities.
I am not going to mention about the luxury yacht of the former president, nor am I going to dwelve on the expensive palace that he built to support his luxury life style. But lets take a look at two, quite extraordinary events. One which has long been history, and the other that’s not going to take too long before it finds its way into our lifestyles.
Passports! Obviously we all need a passport to travel. But what amazed me most was the fact that we were one of the first 10 countries to introduce e-passports to its citizens! Ofcourse there’s a price tag in obtaining these passports and that price would obviously be paid by our Governments!
Lastly to the more recent. But before I mention what this recent activity is, lets first paint an important picture. Just like the individual we depicted in the opening paragraphs who had to have that black satellite Dish on top of their roofs (discarding the question of affordability), we as a nation are living or perhaps moving into times that might question our affordability as a nation more than what we used to before. Just imagine this scenario; our politicians go to the world democratic market where they can buy and sell democratic products. The best ones would obviously have a price tag that’s as fat as building a gold palace or buying a luxury yacht. They check all products on sale and decides, hey hang on a minute, this Decentralization Program has it all from accountability to effective decision making. Lets buy it cos we as Maldivians would buy the best regardless of whether we could afford em’ or not!
I know … I know … not all would agree with me. But guys, I base my conclusions on facts which are clear and unambiguous. Facts which even the common man could agree or comprehend. From what I see, I tend to believe that the Maldivian Way has its flaws and when times calls for tough measures, I think our very own ways will tend to harm us more!
-AE-
Sunday, February 22, 2009
Monday, February 16, 2009
Oil is cheap - as long as the supply doesn't run out
As the world’s major economies are in a recession, the demand for oil has decreased, and as a result price of oil gone down significantly to record lows in recent history. When the major economies like Japan, China and USA are in an economic recession, manufacturing is expected to be down, and demand may not recover within the year. Then, we may see oil price lows of even $30 per barrel this year. According to Bloomberg, crude oil for March delivery is at $37.50 per barrel on the New York Mercantile Exchange in Singapore.
The price of oil escalated to $147 per barrel in July 2008 before it bottomed at about $37 early this year. As at today, the price of oil remains at $44.8 per barrel. Producers are said to be operating at near maximum capacity at about 89.5 million barrels per day. When the economic recessions are over, and then when the economies start their engines, the demand for oil may outrun the supply. And the price of oil is expected to hike up to even $200 and above sometime in 2010 or 2011. The main reason: as we are in the fight to the depletion of oil reserves in the world and this depletion is happening at an alarmingly faster rate.
Despite the limited supply of oil, the demand is expected to grow in the near future, as an average American uses two times the amount of oil used by a European, four times the amount used by Japanese, 12 times the amount used by a Chinese consumer, and 30 times that of an Indian consumer. This is when there are almost 3 billion people in the world living in poverty without the luxury of oil. Just imagine when these people are lifted out of poverty and start oil consumption, how the demand of oil is expected to grow. Bottom line: Unless we find a replacement to oil, the existing stock of oil is going to shrink day by day. Some estimates suggest that it may take 35 years from now for the oil to run out – that is assuming that there is no demand increase, or population increase.
The price of oil escalated to $147 per barrel in July 2008 before it bottomed at about $37 early this year. As at today, the price of oil remains at $44.8 per barrel. Producers are said to be operating at near maximum capacity at about 89.5 million barrels per day. When the economic recessions are over, and then when the economies start their engines, the demand for oil may outrun the supply. And the price of oil is expected to hike up to even $200 and above sometime in 2010 or 2011. The main reason: as we are in the fight to the depletion of oil reserves in the world and this depletion is happening at an alarmingly faster rate.
Despite the limited supply of oil, the demand is expected to grow in the near future, as an average American uses two times the amount of oil used by a European, four times the amount used by Japanese, 12 times the amount used by a Chinese consumer, and 30 times that of an Indian consumer. This is when there are almost 3 billion people in the world living in poverty without the luxury of oil. Just imagine when these people are lifted out of poverty and start oil consumption, how the demand of oil is expected to grow. Bottom line: Unless we find a replacement to oil, the existing stock of oil is going to shrink day by day. Some estimates suggest that it may take 35 years from now for the oil to run out – that is assuming that there is no demand increase, or population increase.
Wednesday, February 11, 2009
Are we heading towards difficult times? Some inspiration by 'Maldive'
Here's a comment by my good friend 'Maldive' to one of my previous posts.
I have been following the global financial crisis very closely n have been wondering about its impact to the Maldives. As my profession and background is very much in the financial and management side, I often wonder what can our government do to minimize the impacts of this recession the world is facing. I guess without a doubt we will be highly exposed to this recession come 2009.
The points you have posed are absolutely correct and the best part is that you have shown me that atleast there are some people in Maldives that are fearing about the impact of this crisis. It is rather sad realizing that our country is a victim of a new epidemic that’s spreading viciously from island to island, community to community, family to family and inviduals to indivudals.
What I am talking about is politics. Media headlines is all about Politics and nothing makes headlines if it is not politics. This is a sad dose of reality and I wish sooner rather than later we change this and start realizing that there are better things to life than just politics. Anyways, I am not here to talk about politics, and funnily enough my new year resolution is about totally stop talking about politics!I would like to mention couple of solutions that our government could start taking to help minimize the impact of this financial/ecomic meltdown. What I am about to highlight is twofold. One is actioning through spending and the other actioning through earnings.
Both related to the dollars or foreign reserves!When it comes to spending, we have to aknowledge that Maldivians are lavish spenders. Going to Colombo, Bangkok, Dubai, or India is more like visiting a next door neighbor. What we don’t realize is that the sum total of these spendings in any given year could reach to a significant amount of foreign exchanges leaving our own reserves and damaging the economy. Every dollar that leaves our nation is an outflow of foreign exchange reserves and these are more like just wasting our wealth! I think we need to educate us (the individuals) in stopping from spending lavishly on these unwanted trips!
Individuals can make a difference, and these individuals firstly needs to be taught of the consequences of their decisions. When it comes to earnings, I am highlighting the fact that we need to show our exporters (mainly MIFCO), the right way of doing things. I believe and I know this as well, MIFCO is renowned to be run very inefficiently! This is where we could generate huge cost savings (by finding ways of running as efficiently and effectively as possible) and ultimately pass those savings in terms of more effective and competitive pricings. Promoting our local stocks is another way of moving forward especially knowing that we rely so heavily on imported goods.
If MIFCO could be run efficiently, why not all Maldivians rely on their produce? If our fishermen can catch fish, why not we buy fish instead of chicken? If Srilanka can sell eggs, why not we start doing this in large scale locally? If we can sell eggs, why not we start selling poultry? My point is, we are capable of these things! My point is generating demands for local produce can help our economy big time and we will be able to minimize this risk that’s daunting our shores! Availability of fruits and veggies, kaashi and the baraboas, can also be done. Those farmers needs a little bit of a pat on their backs, and the full governmental support! These are the times in which our economic saviours will not be wearing a suit and sitting in the parliament wondering about what next to do with the thousands of irrational incomes they would receive at the end of the month! These are times where the economic saviours will be YOU and ME, the common man, or should I say that everyday fisherman or farmer that you picture wearing a sarong, a torn apart shirt, a funny hat, and lots of reddish nuts in their mouth!I also believe we need to do something about every dollar that leaves our economy via the remittances made by the expats.
Our workforce has a huge percentage of expats and every dollar that leaves our shores is a wound that our economy suffers. Its impact can only be realized in tough times and as we move into such an era, I guess our governments needs to come up with some creative means of holding on to these dollars. Cutting back on the expats could be one approach, but I don’t believe that’s the only approach either. We could easily devise a short term plan in which the banks could play a role in holding on to those dollars (maybe by way of a special expat saving scheme – or something!)!!!Anyways, as Naseer had highlighted, we are moving into some tough times, and I guess tough times calls on to tough measures. I wish to add just one word to Naseers final statement – Spend only what you earn WISELY!
Wednesday, February 4, 2009
The President attacks the Central Bank
The President attacked the central bank of the country, MMA, in a press briefing on Monday, saying that MMA is delaying the process of granting license to three commercial banks to be established in Maldives. His exact words were like “I don’t know why it would take so long to put a stamp on a registry”. However, according to MMA only one bank has so far formally applied for a license as at today (http://www.minivannews.com/news_detail.php?id=5948). What we gather from the minivannews article is that although several banks have expressed interest and had meetings with MMA officials, there have been no applications so far other than the Russian bank. The President has with his harsh words, attacked the central bank of the country and in the process either he lied or did not have the correct information.
The President also declared that with the opening of new commercial banks, the US dollar shortage in the Maldivian market will be resolved. There was also a promise of revaluing Rufiyaa to Rf 10 per US dollar within the next five years.
The present shortage in the US dollar and the parallel (black) market is not a new phenomenon in the Maldives foreign exchange market. There has always been a mismatch between what we earn and the outflow of foreign currency in our economy, and this mismatch has grown alarmingly since 2004. However, the pressure to our exchange rate was disguised after tsunami when we had huge inflows of US dollars through international grants and loans. The existing commercial banks also borrowed from overseas and made US dollar loans to the private sector. All these factors helped in defending the current peg of 12.75.
Unfortunately in the last quarter of 2008, the overseas borrowings from the commercial banks and the injection of US dollars by these banks into the Maldives economy almost stopped. This is believed to be mainly due to the financial difficulties facing the global markets. The crisis has been in a way, a blessing in disguise, as external borrowings by the private sector and the government are all temporary solutions to the mismatch between the foreign currency that earn and spend. As long as we don’t increase the foreign currency revenue, there’ll always be pressure on our exchange rate and shortage of US dollars in the market. Hence, opening new branches of foreign commercial banks may not provide a solution to the problem.
Maldives economy is facing an economic slowdown, problems in the exchange rate, and high inflation. Many of the world economies are in a recession with low inflation. The exchange rate pressure and the high inflation is mostly a problem of our own making. It has less to do with the global economic recession.
The years of economic mismanagement and the financing of the government debt through increasing the money supply of Rufiyaa, has led to a boost in the domestic demand, and an increase in the domestic prices (inflation). While Europe and most other economies had below 5% inflation rates, our economy had 12% inflation in 2008. This inflation differential has put pressure on the real value of Rufiyaa in terms of other currencies.
It's times like these that a new President needs to work closely with the Finance Minister and the Governor of central bank in order to restore confidence. It's times like these, we need to show coordination between different economic agents in the country. But what do we see? The President attacking the central bank, as if the central bank belongs to the opposition party.
The President also declared that with the opening of new commercial banks, the US dollar shortage in the Maldivian market will be resolved. There was also a promise of revaluing Rufiyaa to Rf 10 per US dollar within the next five years.
The present shortage in the US dollar and the parallel (black) market is not a new phenomenon in the Maldives foreign exchange market. There has always been a mismatch between what we earn and the outflow of foreign currency in our economy, and this mismatch has grown alarmingly since 2004. However, the pressure to our exchange rate was disguised after tsunami when we had huge inflows of US dollars through international grants and loans. The existing commercial banks also borrowed from overseas and made US dollar loans to the private sector. All these factors helped in defending the current peg of 12.75.
Unfortunately in the last quarter of 2008, the overseas borrowings from the commercial banks and the injection of US dollars by these banks into the Maldives economy almost stopped. This is believed to be mainly due to the financial difficulties facing the global markets. The crisis has been in a way, a blessing in disguise, as external borrowings by the private sector and the government are all temporary solutions to the mismatch between the foreign currency that earn and spend. As long as we don’t increase the foreign currency revenue, there’ll always be pressure on our exchange rate and shortage of US dollars in the market. Hence, opening new branches of foreign commercial banks may not provide a solution to the problem.
Maldives economy is facing an economic slowdown, problems in the exchange rate, and high inflation. Many of the world economies are in a recession with low inflation. The exchange rate pressure and the high inflation is mostly a problem of our own making. It has less to do with the global economic recession.
The years of economic mismanagement and the financing of the government debt through increasing the money supply of Rufiyaa, has led to a boost in the domestic demand, and an increase in the domestic prices (inflation). While Europe and most other economies had below 5% inflation rates, our economy had 12% inflation in 2008. This inflation differential has put pressure on the real value of Rufiyaa in terms of other currencies.
It's times like these that a new President needs to work closely with the Finance Minister and the Governor of central bank in order to restore confidence. It's times like these, we need to show coordination between different economic agents in the country. But what do we see? The President attacking the central bank, as if the central bank belongs to the opposition party.
Sunday, February 1, 2009
އިންފްލޭޝަން މައިތިރިކުރުނ
ރާއްޖޭގެ އިޤްތިޞާދާއިމެދު ވާހަކަތަކުގައި ފަހަކަށްއައިސް އެންމެ ގިނައިން އިވޭ ވާހަކައަކީ މުދަލާއި ޚިދުމަތުގެ އަގުތައް (އިންފްލޭޝަން) މައްޗަށްދާވާހަކައެވެ. ނޫސްތަކުގައިވެސް އެންމެ ބޮޑަށް ފާޑުކިޔަމުންދަނީ ރާއްޖޭގައި އިންފްލޭޝަން މައްޗަށްދާކަމާއިމެދުއެވެ. އަދި އިންފްލޭޝަން މައްޗަށް ދިއުމުގެ ސަބަބުތައްވެސް ބަޔާންކުރަމުންދެއެވެ.
އިންފްލޭޝަންއަކީ ކޮބައިހެއްޔެވެ؟ އިންފްލޭޝަންއާއިމެދު އެހާބޮޑަށް ކަންބޮޑުވާންޖެހެނީ ކީއްވެގެން ހެއްޔެވެ؟ މިސުވާލުތަކުގެ ޖަވާބު އެންމެ ރަގަޅަށް އޮޅުންފިލުވައިދޭން އެގޭނީ ލެޓިން އެމެރިކާގެ ޤައުމުތަކުގެ މީހުންނަށެވެ. ބޮލީވިއާފަދަ ޤައުމުތަކުގައި އަށްޑިހައިގެ އަހަރުތަކުގައި އިންފްލޭޝަން ރޭޓް %600 އަށްވެސް އަރައިގެން ދިޔައެވެ. ދުވާލަކު ތިންހަތަރުފަހަރު ތަކެތީގެ އަގުތައް މައްޗަށް އަރައިގެންދެއެވެ. ކޮފީތައްޓެއްގެ އަގުވެސް މިލިއަނަށް އަރައިގެން ދިޔައެވެ. ފައިސާގެ އެއްވެސް އަގެއް ނެތިގެންގޮސް، ރައްޔިތުން ފަޤީރުކަމުގެ ޙާލަތަށް ވެއްޓި، އިޤްތިޞާދަށް ބޮޑުވަބާއަކަށް ވެގެންދިޔައެވެ.
މީގެ އިތުރުން 70 ގެ ކުރީކޮޅު އެމެރިކާ، އިގިރޭސިވިލާތް، ، އަދި ޖަޕާން ގައިވެސް އިންފްލޭޝަން މައްޗަށްދާންފެށިއެވެ. އަދި މިހާރު ރާއްޖޭގައި ވާހަކަދެކެވޭ ފަދައިން މީހުން މިކަމާއި ކަންބޮޑުވުން ފާޅުކުރަމުން ދިޔައެވެ. އަދި އަގުތައް މައްޗަށްދާ ސަބަބުތަކުގެ ގޮތުގައި ތަފާތު ވާހަކަތައް ދެކެވެމުން ދިޔައެވެ. އެމެރިކާ ސަރުކާރުން ބުނަމުން ދިޔައީ ކުންފުނިތަކުން މުސާރަތައް ބޮޑުކުރުމުގެ ސަބަބުން އިންފްލޭޝަން އިތުރަށް މައްޗަށް ދަނީކަމުގައެވެ. އަނެއްބަޔަކު ބުނީ އިންފްލޭޝަން މައްޗަށްދަނީ އިމްޕޯރޓްކުރެވޭ މުދަލުގެ ސަބަބުންކަމުގައެވެ. ބޭރުދުނިޔޭގައި އަގުތައް މައްޗަށް ދާތީވެ، އިންފްލޭޝަން މަތިވަނީކަމުގައެވެ. ބައެއް ޤައުމުތަކުގެ ސަރުކާރުން ގޯސްކުރަމުންދިޔައީ ޢަރަބި ތެޔޮ އުފައްދާ ޤައުމުތަކެވެ. އެއީ، ތެލުގެ އަގު ބޮޑުވުމުގެ ސަބަބުން އިންފްލޭޝަން މައްޗަށްދަނީކަމަށެވެ. އެކަކު އަނެކަކުގެ ބޮލަށްޖަހަމުން ދިޔައެވެ. އިންފްލޭޝަންގެ ވަބާއިން އެމެރިކާއާއި އިގިރޭސިވިލާތް ސަލާމަތްނުވެވިގެން އުޅެނިކޮށް ޖަޕާން އިންފްލޭޝަންއިން ސަލާމަތްވެ، އެހެނިހެން ޤައުމުތަކަށް މިސާލަކަށްވެގެންދިޔައެވެ. ޖަރުމަނަކީ ޤައުމަށްބޭނުންވާ ހުރިހާ ތެލެއް އެތެރެކުރަމުންދިޔަ ޤައުމެކެވެ. އެކަމަކު ޖަރުމަނުގައި އޭރު އިންފްލޭޝަންގެ މައްސަލަ ކުރިމައްޗެއްނުވެއެވެ. އެހެންވީމަ އިންފްލޭޝަން މައްޗަށްދަނީ ކޮންސަބަބަކާއިހުރެހެއްޔެވެ؟
ރާއްޖޭގައި އިންފްލޭޝަންގެ ސަބަބުތަކަކީ އެއްބަޔަކުބުނާގޮތުންނަމަ، އިމްޕޯރޓްކުރާ މުދަލުގެ އަގުތައް މައްޗަށްދިއުމެވެ. އަނެއްބަޔަކު ގޯސްކުރަނީހަމަ ތެލުގެ އަގުބޮޑުވުމެވެ. މާލޭގައި ގެދޮރުގެ ކުލިއަގުބޮޑުވުންވެސް އެއްބަޔަކު އިންފްލޭޝަން މައްޗަށްދިއުން މާނަކުރެއެވެ.އެންމެ ގިނައިން ދެކެވޭ ވާހަކައަކީ ސަރުކާރުގެ ބަޖެޓްބޮޑުވެގެންދިއުމެވެ.
އިކޮނޮމިކްސް ޢިލްމުގައި އިންފްލޭޝަން މާނަކުރެވެނީ މުދަލާއި ޚިދުމަތްތަކުގެ އަގުތައް ޖުމްލަގޮތެއްގައި ބޮޑުވަމުންދިއުމެވެ. މަހަކުން އެއްފަހަރު ގިނަ ޢަދަދެއްގެ މުދަލާއި ޚިދުމަތުގެ އަގުތައް ބޮޑުވާ ނިސްބަތް އިތުރުވަމުންދާނަމަ، އިންފްލޭޝަން އިތުރުވުން މެދުވެރިވެދާނެއެވެ. މީގައި ސަމާލުކަންދޭންވީ އަގުތައް ބޮޑުވާ ނިސްބަތަށެވެ. އިންޑިޔާގައި ކުއްލިއަކަށް ފިޔަލުގެ އަގުބޮޑުވެގެންދިއުމުން ރާއްޖޭގައި ފިޔަލުގެ އަގު ބޮޑުވެގެން ހިގައިދާނެއެވެ. އެކަމަކު، ފިޔަލުގެ އަގު ނުހިފެހެއްޓި މައްޗަށް އަރަމުންދާނަމަ، އެއީ އިންޑިޔާގައި ފިޔާއަގުބޮޑުވުން ސަބަބެއްކަމުގައިނުވެ ހިގައިދާނެއެވެ. ޢާންމުގޮތެއްގައި، އިންފްލޭޝަން މައްޗަށްދާނަމަ، ފައިސާގެ އަގުވެއްޓެމުންދާނެއެވެ. މަދު ޢަދަދެއްގެ މުދާގަތުމަށް، ބައިވަރު ފައިސާ ބޭނުންކުރަންޖެހިދާނެއެވެ. ކުއްލިއަކަށް، ޢާއިލާތަކުގެ ޚަރަދުތައް އިތުރުވެ، ލިބޭ އާމްދަނީއިން ދެކޮޅުނުޖެހޭ ޙާލަތަކަށް ވެއްޓިގެން ހިގައިދާނެއެވެ. މިހެންކަމުން އިންފްލޭޝަން ޙައްލުކުރާނީ ކިހިނެއް ހެއްޔެވެ؟
އިންފްލޭޝަންގެ އެންމެބޮޑު ސަބަބަކީ ސަރުކާރުގެ މާލީއިދާރާއެވެ. ނުވަތަ ސެންޓްރަލް ބޭންކެވެ. އިތުރަށް ފައިސާގެ ނޫޓް ޗާޕްކުރާވަރަކަށް (މަނީ ސަޕްލައި އިތުރުވާވަރަކަށް) އިންފްލޭޝަން ދުވަހެއްދުވަހަކަށް މައްޗަށްދާނެއެވެ. އެމެރިކާގައިވެސް އިންފްލޭޝަން އޭރު މައްޗަށްދިޔައީ މިސަބަބާއިހުރެއެވެ. ޖަރުމަނުގައި ދެވަނަ ބޮޑު ހަގުރާމައަށްފަހު އިންފްލޭޝަން އަތްނުފޯރާވަރަށް މައްޗަށްދިޔައީވެސް މިސަބަބާއިހުރެއެވެ. އެހެންކަމުން އިންފްލޭޝަން މައިތިރިކުރަންބޭނުންނަމަ، އިތުރަށް ނޫޓްޗާޕުކުރުން މަދުކުރަންވީއެވެ. ރާއްޖޭގައިނަމަ އިންފްލޭޝަން މައިތިރިކުރުމުގެ އެންމެ ބޮޑު ބާރުއޮތީ އެމް.އެމް.އޭ ގެ އަތުގައެވެ.
އެމް.އެމް.އޭ އިތުރަށް ނޫޓްޗާޕްކުރަނީ، ނުވަތަ މަނީ ސަޕްލައި އިތުރުކުރަނީ ކީއްވެގެން ހެއްޔެވެ؟ އެންމެ ބޮޑު ސަބަބަކީ ސަރުކާރުގެ ޚަރަދުތައް އިތުރުވަމުންދާތީވެ، މި ޚަރަދުތައް ފޫބެއްދުމަށްޓަކައި، ވަގުތީގޮތުން ހޯދަންޖެހޭ ފައިސާއަށްޓަކައެވެ. އެމެރިކާގައި 70 ގެ އަހަރުތަކުގައި އިންފްލޭޝަން އެންމެ ފަހުން ހުއްޓުމަކަށް ގެނައީ މަނީ ސަޕްލައި އިތުރުކުރުން މަޑުޖައްސާލައިގެންނެވެ. އެހެންކަމުން، އެމް.އެމް.އޭ އިން އެންމެ ފުރަތަމަވެސް ގޯސްކުރާނީ ފިނޭންސް މިނިސްޓްރީއެވެ. ފިނޭންސް މިނިސްޓްރީއިން ގޯސްކުރާނީ އެހެނިހެން މިނިސްޓްރީއިން ހުށަހަޅާފައިވާ ބޮޑެތި ބަޖެޓުތަކެވެ. އެހެނިހެން މިނިސްޓްރީތަކުން ގޯސްކުރާނީ ކާކުހެއްޔެވެ؟ ރައްޔިތުންނެވެ. މިނިސްޓްރީތަކުގެ ކިބައިން އެކިއެކި ކަންތައްތައް ބޭނުންވަނީ ރައްޔިތުންނެވެ. ފަޅުފުންކުރުމާއި، ބަނދަރު ހެދުމުގެ ވާހަކައާއި، ޓެކްސްޓްފޮތާއި، އެހެނިހެން ޚިދުމަތްތަކަށް ޚަރަދުކުރުމަށް އެދެނީ ރައްޔިތުންނެވެ. ރައްޔިތުންގެ ޑިމާންޑްތައް އިތުރުވާރަކަށް ސަރުކާރުގެ ޚަރަދުތައް އިތުރުވެ، ބަޖެޓް ޑެފިސިޓްވެގެންދާނެއެވެ. އަދި މިކަމުގެ ސަބަބުން އެމް.އެމް.އޭ އިން ނޫޓް ޗާޕްކުރުން އިތުރުކުރަމުންދާނެއެވެ. އިންފްލޭޝަން އިތުރުވާނެއެވެ. މިކަމުގެ ޙައްލަކީ ކޮބައިހެއްޔެވެ؟
އިލްފްލޭޝަންއާއި، އެހެނިހެން އިޤްތިޞާދީ މައްސަލަތައް ޙައްލުކުރުމުގައި އެންމެ މުހިންމު އެއްކަމަކީ ސެންޓްރަލްބޭންކް ފިނޭންސް މިނިސްޓްރީއާއި، ސަރުކާރުގެ ބާރުނުފޯރާ މުސްތަޤިއްލު ތަނަކަށްހެދުމެވެ. ލެޓިން އެމެރިކާގެ ޤައުމުތަކުންވެސް ފަހަކަށްއައިސް ހޯދާފައިވާ ކުރިއެރުމުގެ އެއް އަސްލަކީ ސެންޓްރަލް ބޭންކް އިންޑިޕެންޑެންޓްކުރުމެވެ. ދާދިފަހުން ރާއްޖޭގެ ސެންޓްރަލްބޭންކް، އެމް.އެމް.އޭވެސް ވަނީ ޤާނޫނެއްގެ ދަށުން މުސްތަޤިއްލުތަނަކަށްވެފައެވެ. އެހެންކަމަށްވާނަމަ، އެމް.އެމް.އޭ ގެ ގަވަރނަރަށް ފިނޭންސް މިނިސްޓްރީގެ ނުފޫޒު ފޯރައިގެންނުވާނެއެވެ. ގަވަރނަރަކީ، ފިނޭންސް މިނިސްޓަރު އަންގާހާ ކަމަކަށް ތަބާނުވާ، ފިނޭންސް މިނިސްޓަރަށް ޖެހިލުންނުވާ މީހަކަށްވާންޖެހެއެވެ. އެމް.އެމް.އޭ ގެ މުސްތަޤިއްލުކަން އެންމެ ފުރިހަމަ މާނައިގާ އޮތްކަމުގައިވާނަމަ، ރާއްޖޭގެ އިންފްލޭޝަން މައިތިރިކުރުމުގެ ބާރު އެމް.އެމް.އޭ އަށް ލިބިގެންވެއެވެ.
އަނެއްކަމަކީ ސަރުކާރުގެ ޚަރަދުތައް ބޮޑުވެގެން ދިއުމުގެ ވާހަކައެވެ. ރާއްޖޭގައި ފަހަކަށްއައިސް އިސްރާފުގެ ބައިވެސް ވަނީ ވަރަށް ބޮޑުތަން އިތުރުވެފައެވެ. އޮފީސްތަކުގެ ބަޖެޓުން ކޮންމެ މަހަކުވެސް އެތައް ފައިސާއެއް ތަފާތު ޙަފްލާތަކާއި، ރަމްޒީކަންކަމުގައި ބޭކާރުވެގެން އެބަދެއެވެ. ކުރެވޭ މަސައްކަތާއި އަޅާބަލާއިރު ސަރުކާރުގެ ވުޒާރާތަކުގެ މުވައްޒިފުންގެ ޢަދަދުވެސް ގިނަވެފައެވެ. ބޮޑެތި މުސާރަ ލިބޭ، ނަމަވެސް އެދެވޭ ޚިދުމަތެއްނުކުރާ މުވައްޒިފުންގެ ޢަދަދުވެސް މިވަނީ މާގިނަވެފައެވެ. އެހެންކަމުން އިންފްލޭޝަން ޙައްލުކުރުމުގައި، ފިނޭންސް މިނިސްޓްރީއާއި، އެމް.އެމް.އޭ ގެ ޒިންމާ ވަރަށް ބޮޑެވެ. އެންމެ ބޮޑު އެއް ޙައްލަކީ ސަރުކާރުގެ ސައިޒު ކުޑަކުރުމެވެ.
އިންފްލޭޝަންއަކީ ކޮބައިހެއްޔެވެ؟ އިންފްލޭޝަންއާއިމެދު އެހާބޮޑަށް ކަންބޮޑުވާންޖެހެނީ ކީއްވެގެން ހެއްޔެވެ؟ މިސުވާލުތަކުގެ ޖަވާބު އެންމެ ރަގަޅަށް އޮޅުންފިލުވައިދޭން އެގޭނީ ލެޓިން އެމެރިކާގެ ޤައުމުތަކުގެ މީހުންނަށެވެ. ބޮލީވިއާފަދަ ޤައުމުތަކުގައި އަށްޑިހައިގެ އަހަރުތަކުގައި އިންފްލޭޝަން ރޭޓް %600 އަށްވެސް އަރައިގެން ދިޔައެވެ. ދުވާލަކު ތިންހަތަރުފަހަރު ތަކެތީގެ އަގުތައް މައްޗަށް އަރައިގެންދެއެވެ. ކޮފީތައްޓެއްގެ އަގުވެސް މިލިއަނަށް އަރައިގެން ދިޔައެވެ. ފައިސާގެ އެއްވެސް އަގެއް ނެތިގެންގޮސް، ރައްޔިތުން ފަޤީރުކަމުގެ ޙާލަތަށް ވެއްޓި، އިޤްތިޞާދަށް ބޮޑުވަބާއަކަށް ވެގެންދިޔައެވެ.
މީގެ އިތުރުން 70 ގެ ކުރީކޮޅު އެމެރިކާ، އިގިރޭސިވިލާތް، ، އަދި ޖަޕާން ގައިވެސް އިންފްލޭޝަން މައްޗަށްދާންފެށިއެވެ. އަދި މިހާރު ރާއްޖޭގައި ވާހަކަދެކެވޭ ފަދައިން މީހުން މިކަމާއި ކަންބޮޑުވުން ފާޅުކުރަމުން ދިޔައެވެ. އަދި އަގުތައް މައްޗަށްދާ ސަބަބުތަކުގެ ގޮތުގައި ތަފާތު ވާހަކަތައް ދެކެވެމުން ދިޔައެވެ. އެމެރިކާ ސަރުކާރުން ބުނަމުން ދިޔައީ ކުންފުނިތަކުން މުސާރަތައް ބޮޑުކުރުމުގެ ސަބަބުން އިންފްލޭޝަން އިތުރަށް މައްޗަށް ދަނީކަމުގައެވެ. އަނެއްބަޔަކު ބުނީ އިންފްލޭޝަން މައްޗަށްދަނީ އިމްޕޯރޓްކުރެވޭ މުދަލުގެ ސަބަބުންކަމުގައެވެ. ބޭރުދުނިޔޭގައި އަގުތައް މައްޗަށް ދާތީވެ، އިންފްލޭޝަން މަތިވަނީކަމުގައެވެ. ބައެއް ޤައުމުތަކުގެ ސަރުކާރުން ގޯސްކުރަމުންދިޔައީ ޢަރަބި ތެޔޮ އުފައްދާ ޤައުމުތަކެވެ. އެއީ، ތެލުގެ އަގު ބޮޑުވުމުގެ ސަބަބުން އިންފްލޭޝަން މައްޗަށްދަނީކަމަށެވެ. އެކަކު އަނެކަކުގެ ބޮލަށްޖަހަމުން ދިޔައެވެ. އިންފްލޭޝަންގެ ވަބާއިން އެމެރިކާއާއި އިގިރޭސިވިލާތް ސަލާމަތްނުވެވިގެން އުޅެނިކޮށް ޖަޕާން އިންފްލޭޝަންއިން ސަލާމަތްވެ، އެހެނިހެން ޤައުމުތަކަށް މިސާލަކަށްވެގެންދިޔައެވެ. ޖަރުމަނަކީ ޤައުމަށްބޭނުންވާ ހުރިހާ ތެލެއް އެތެރެކުރަމުންދިޔަ ޤައުމެކެވެ. އެކަމަކު ޖަރުމަނުގައި އޭރު އިންފްލޭޝަންގެ މައްސަލަ ކުރިމައްޗެއްނުވެއެވެ. އެހެންވީމަ އިންފްލޭޝަން މައްޗަށްދަނީ ކޮންސަބަބަކާއިހުރެހެއްޔެވެ؟
ރާއްޖޭގައި އިންފްލޭޝަންގެ ސަބަބުތަކަކީ އެއްބަޔަކުބުނާގޮތުންނަމަ، އިމްޕޯރޓްކުރާ މުދަލުގެ އަގުތައް މައްޗަށްދިއުމެވެ. އަނެއްބަޔަކު ގޯސްކުރަނީހަމަ ތެލުގެ އަގުބޮޑުވުމެވެ. މާލޭގައި ގެދޮރުގެ ކުލިއަގުބޮޑުވުންވެސް އެއްބަޔަކު އިންފްލޭޝަން މައްޗަށްދިއުން މާނަކުރެއެވެ.އެންމެ ގިނައިން ދެކެވޭ ވާހަކައަކީ ސަރުކާރުގެ ބަޖެޓްބޮޑުވެގެންދިއުމެވެ.
އިކޮނޮމިކްސް ޢިލްމުގައި އިންފްލޭޝަން މާނަކުރެވެނީ މުދަލާއި ޚިދުމަތްތަކުގެ އަގުތައް ޖުމްލަގޮތެއްގައި ބޮޑުވަމުންދިއުމެވެ. މަހަކުން އެއްފަހަރު ގިނަ ޢަދަދެއްގެ މުދަލާއި ޚިދުމަތުގެ އަގުތައް ބޮޑުވާ ނިސްބަތް އިތުރުވަމުންދާނަމަ، އިންފްލޭޝަން އިތުރުވުން މެދުވެރިވެދާނެއެވެ. މީގައި ސަމާލުކަންދޭންވީ އަގުތައް ބޮޑުވާ ނިސްބަތަށެވެ. އިންޑިޔާގައި ކުއްލިއަކަށް ފިޔަލުގެ އަގުބޮޑުވެގެންދިއުމުން ރާއްޖޭގައި ފިޔަލުގެ އަގު ބޮޑުވެގެން ހިގައިދާނެއެވެ. އެކަމަކު، ފިޔަލުގެ އަގު ނުހިފެހެއްޓި މައްޗަށް އަރަމުންދާނަމަ، އެއީ އިންޑިޔާގައި ފިޔާއަގުބޮޑުވުން ސަބަބެއްކަމުގައިނުވެ ހިގައިދާނެއެވެ. ޢާންމުގޮތެއްގައި، އިންފްލޭޝަން މައްޗަށްދާނަމަ، ފައިސާގެ އަގުވެއްޓެމުންދާނެއެވެ. މަދު ޢަދަދެއްގެ މުދާގަތުމަށް، ބައިވަރު ފައިސާ ބޭނުންކުރަންޖެހިދާނެއެވެ. ކުއްލިއަކަށް، ޢާއިލާތަކުގެ ޚަރަދުތައް އިތުރުވެ، ލިބޭ އާމްދަނީއިން ދެކޮޅުނުޖެހޭ ޙާލަތަކަށް ވެއްޓިގެން ހިގައިދާނެއެވެ. މިހެންކަމުން އިންފްލޭޝަން ޙައްލުކުރާނީ ކިހިނެއް ހެއްޔެވެ؟
އިންފްލޭޝަންގެ އެންމެބޮޑު ސަބަބަކީ ސަރުކާރުގެ މާލީއިދާރާއެވެ. ނުވަތަ ސެންޓްރަލް ބޭންކެވެ. އިތުރަށް ފައިސާގެ ނޫޓް ޗާޕްކުރާވަރަކަށް (މަނީ ސަޕްލައި އިތުރުވާވަރަކަށް) އިންފްލޭޝަން ދުވަހެއްދުވަހަކަށް މައްޗަށްދާނެއެވެ. އެމެރިކާގައިވެސް އިންފްލޭޝަން އޭރު މައްޗަށްދިޔައީ މިސަބަބާއިހުރެއެވެ. ޖަރުމަނުގައި ދެވަނަ ބޮޑު ހަގުރާމައަށްފަހު އިންފްލޭޝަން އަތްނުފޯރާވަރަށް މައްޗަށްދިޔައީވެސް މިސަބަބާއިހުރެއެވެ. އެހެންކަމުން އިންފްލޭޝަން މައިތިރިކުރަންބޭނުންނަމަ، އިތުރަށް ނޫޓްޗާޕުކުރުން މަދުކުރަންވީއެވެ. ރާއްޖޭގައިނަމަ އިންފްލޭޝަން މައިތިރިކުރުމުގެ އެންމެ ބޮޑު ބާރުއޮތީ އެމް.އެމް.އޭ ގެ އަތުގައެވެ.
އެމް.އެމް.އޭ އިތުރަށް ނޫޓްޗާޕްކުރަނީ، ނުވަތަ މަނީ ސަޕްލައި އިތުރުކުރަނީ ކީއްވެގެން ހެއްޔެވެ؟ އެންމެ ބޮޑު ސަބަބަކީ ސަރުކާރުގެ ޚަރަދުތައް އިތުރުވަމުންދާތީވެ، މި ޚަރަދުތައް ފޫބެއްދުމަށްޓަކައި، ވަގުތީގޮތުން ހޯދަންޖެހޭ ފައިސާއަށްޓަކައެވެ. އެމެރިކާގައި 70 ގެ އަހަރުތަކުގައި އިންފްލޭޝަން އެންމެ ފަހުން ހުއްޓުމަކަށް ގެނައީ މަނީ ސަޕްލައި އިތުރުކުރުން މަޑުޖައްސާލައިގެންނެވެ. އެހެންކަމުން، އެމް.އެމް.އޭ އިން އެންމެ ފުރަތަމަވެސް ގޯސްކުރާނީ ފިނޭންސް މިނިސްޓްރީއެވެ. ފިނޭންސް މިނިސްޓްރީއިން ގޯސްކުރާނީ އެހެނިހެން މިނިސްޓްރީއިން ހުށަހަޅާފައިވާ ބޮޑެތި ބަޖެޓުތަކެވެ. އެހެނިހެން މިނިސްޓްރީތަކުން ގޯސްކުރާނީ ކާކުހެއްޔެވެ؟ ރައްޔިތުންނެވެ. މިނިސްޓްރީތަކުގެ ކިބައިން އެކިއެކި ކަންތައްތައް ބޭނުންވަނީ ރައްޔިތުންނެވެ. ފަޅުފުންކުރުމާއި، ބަނދަރު ހެދުމުގެ ވާހަކައާއި، ޓެކްސްޓްފޮތާއި، އެހެނިހެން ޚިދުމަތްތަކަށް ޚަރަދުކުރުމަށް އެދެނީ ރައްޔިތުންނެވެ. ރައްޔިތުންގެ ޑިމާންޑްތައް އިތުރުވާރަކަށް ސަރުކާރުގެ ޚަރަދުތައް އިތުރުވެ، ބަޖެޓް ޑެފިސިޓްވެގެންދާނެއެވެ. އަދި މިކަމުގެ ސަބަބުން އެމް.އެމް.އޭ އިން ނޫޓް ޗާޕްކުރުން އިތުރުކުރަމުންދާނެއެވެ. އިންފްލޭޝަން އިތުރުވާނެއެވެ. މިކަމުގެ ޙައްލަކީ ކޮބައިހެއްޔެވެ؟
އިލްފްލޭޝަންއާއި، އެހެނިހެން އިޤްތިޞާދީ މައްސަލަތައް ޙައްލުކުރުމުގައި އެންމެ މުހިންމު އެއްކަމަކީ ސެންޓްރަލްބޭންކް ފިނޭންސް މިނިސްޓްރީއާއި، ސަރުކާރުގެ ބާރުނުފޯރާ މުސްތަޤިއްލު ތަނަކަށްހެދުމެވެ. ލެޓިން އެމެރިކާގެ ޤައުމުތަކުންވެސް ފަހަކަށްއައިސް ހޯދާފައިވާ ކުރިއެރުމުގެ އެއް އަސްލަކީ ސެންޓްރަލް ބޭންކް އިންޑިޕެންޑެންޓްކުރުމެވެ. ދާދިފަހުން ރާއްޖޭގެ ސެންޓްރަލްބޭންކް، އެމް.އެމް.އޭވެސް ވަނީ ޤާނޫނެއްގެ ދަށުން މުސްތަޤިއްލުތަނަކަށްވެފައެވެ. އެހެންކަމަށްވާނަމަ، އެމް.އެމް.އޭ ގެ ގަވަރނަރަށް ފިނޭންސް މިނިސްޓްރީގެ ނުފޫޒު ފޯރައިގެންނުވާނެއެވެ. ގަވަރނަރަކީ، ފިނޭންސް މިނިސްޓަރު އަންގާހާ ކަމަކަށް ތަބާނުވާ، ފިނޭންސް މިނިސްޓަރަށް ޖެހިލުންނުވާ މީހަކަށްވާންޖެހެއެވެ. އެމް.އެމް.އޭ ގެ މުސްތަޤިއްލުކަން އެންމެ ފުރިހަމަ މާނައިގާ އޮތްކަމުގައިވާނަމަ، ރާއްޖޭގެ އިންފްލޭޝަން މައިތިރިކުރުމުގެ ބާރު އެމް.އެމް.އޭ އަށް ލިބިގެންވެއެވެ.
އަނެއްކަމަކީ ސަރުކާރުގެ ޚަރަދުތައް ބޮޑުވެގެން ދިއުމުގެ ވާހަކައެވެ. ރާއްޖޭގައި ފަހަކަށްއައިސް އިސްރާފުގެ ބައިވެސް ވަނީ ވަރަށް ބޮޑުތަން އިތުރުވެފައެވެ. އޮފީސްތަކުގެ ބަޖެޓުން ކޮންމެ މަހަކުވެސް އެތައް ފައިސާއެއް ތަފާތު ޙަފްލާތަކާއި، ރަމްޒީކަންކަމުގައި ބޭކާރުވެގެން އެބަދެއެވެ. ކުރެވޭ މަސައްކަތާއި އަޅާބަލާއިރު ސަރުކާރުގެ ވުޒާރާތަކުގެ މުވައްޒިފުންގެ ޢަދަދުވެސް ގިނަވެފައެވެ. ބޮޑެތި މުސާރަ ލިބޭ، ނަމަވެސް އެދެވޭ ޚިދުމަތެއްނުކުރާ މުވައްޒިފުންގެ ޢަދަދުވެސް މިވަނީ މާގިނަވެފައެވެ. އެހެންކަމުން އިންފްލޭޝަން ޙައްލުކުރުމުގައި، ފިނޭންސް މިނިސްޓްރީއާއި، އެމް.އެމް.އޭ ގެ ޒިންމާ ވަރަށް ބޮޑެވެ. އެންމެ ބޮޑު އެއް ޙައްލަކީ ސަރުކާރުގެ ސައިޒު ކުޑަކުރުމެވެ.
Tuesday, January 27, 2009
Will we increase the productivity by changing the working hours from 08:00 to 16:00?
There has been a surprising change in the structure of civil service pay structure and the timing of government offices, to be implemented in February 2009. According to the press briefings and various interviews, there will be a slight pay rise to all government employees due to this sudden change, and starting from February 01st, the working hours of all government offices will be 08:00 to 16:00, with a lunch break of one hour from 12:00 to 13:00. The total working hours remains at 07, which was the same even with 07:30 to 14:30 as the official working hours. So, what is the objective of changing the work hours? What are we trying to achieve? Normally, one would expect an increase in pay rise to be associated with an increase in working hours in order to increase the aggregate output of the country. If the change does not increase the number of working hours, I don’t see too many economic benefits of simply starting 30 minutes late, and finishing 1.5 hours late, with one hour break in between (which becomes technically an unproductive one hour).
Due to this change, the civil service employees dependent on part-time employment are mostly to suffer. As many may not be able to continue their part-time jobs, and as a result lose a significant amount of their previous income. If the pay rise does not compensate such loss, then there will be a net loss in the economic welfare. The economy also loses as many leave their part-time employment. Normally, these part-time employments are placed in the private sector, and people are hired selectively based on productivity. This recent reform may in the end lower the productivity in the economy.
Brining our work hours in line with international practice is one of the reasons that were often heard as justification for the change in government working hours. In almost all other countries, people are required to commute hours to work every morning, thus justifies late starting time. But in Maldives, we could get to work within a maximum 15 minutes even in the largest islands in the Southern atolls. Starting our work even at 7:00 will not be a problem for us (Staff at schools start at this time even now). If our objective is to increase productivity, starting at 07:00 and finishing at 14:00 would be a much better option.
Due to this change, the civil service employees dependent on part-time employment are mostly to suffer. As many may not be able to continue their part-time jobs, and as a result lose a significant amount of their previous income. If the pay rise does not compensate such loss, then there will be a net loss in the economic welfare. The economy also loses as many leave their part-time employment. Normally, these part-time employments are placed in the private sector, and people are hired selectively based on productivity. This recent reform may in the end lower the productivity in the economy.
Brining our work hours in line with international practice is one of the reasons that were often heard as justification for the change in government working hours. In almost all other countries, people are required to commute hours to work every morning, thus justifies late starting time. But in Maldives, we could get to work within a maximum 15 minutes even in the largest islands in the Southern atolls. Starting our work even at 7:00 will not be a problem for us (Staff at schools start at this time even now). If our objective is to increase productivity, starting at 07:00 and finishing at 14:00 would be a much better option.
Sunday, January 18, 2009
New resort developments: the lost revenue
Maldives government has decided to grant an extension to all the new resort developers, so that they get an additional 12 months before they start paying rent to the government.
The lease agreement between the investor and the government requires the investor to start operations and start paying the lease rent within 24 months of the signing the agreement.
The decision by the government to grant an extension would result in a decline in the expected government revenue within the next 12 months, on top of the escalating government expenditures.
The delay in opening the new resorts for operation also means the lost revenue to the government through bed tax.
So, the delay and extension costs a lot to the government, and these factors make us wonder, why the delay in opening those resorts?
The leasing of islands for tourism development is carried out by the Ministry of Tourism and follows a model in which uninhabited islands are auctioned off in a bidding process with government publishing the criteria in advance.
The Ministry of Tourism embarked on an ambitious expansion of the tourism industry with 37 new islands opened for bidding in the period 2004-2006. The first round of developments was announced in 2004, with 11 islands being opened for bidding.
In 2006, with the new set of islands, government tried to be more transparent and objective and opened islands for bidding under the ‘open-rent’ and ‘closed-rent’ categories.
If we were to construct a model for determining the probability of opening a resort for operations within 24 months of awarding the island, it would depend on the following factors: availability of investment finance; management expertise; location of the island; proposed lease rent; assuming all the other factors remain the same.
The availability of investment finance or the ability of obtaining debt finance from banks is linked to almost all the factors mentioned above. For example, the higher the proposed lease rent, the lower will be the profitability, and thus feasibility of the investment. The location of the island has significant implications on the transportation costs and the construction costs of the island, and thus affects the prospect of obtaining finance as well.
The lease rent plays a major and a significant role in making the investment worthwhile, and thus the sustainability of the venture. Hence, bidding procedures need to be de-linked to the rent component in order to make new resort developments a success. The policies adopted in 2004-2006, especially in the case of the ‘open-rent’ category of islands, has done nothing but inflated the lease rents above the true market value. As a result, new investors are struggling to obtain the necessary finance.
If these islands were awarded with industry average lease rents, the probability of getting those islands opened would have increased, and with it the government revenue through bed tax.
Sustainable tourism development is much more important than trying to squeeze short-term gains through high lease rent payments. Sustainable it can be made only through allowing true market values to be reflected in the lease rents.
The lease agreement between the investor and the government requires the investor to start operations and start paying the lease rent within 24 months of the signing the agreement.
The decision by the government to grant an extension would result in a decline in the expected government revenue within the next 12 months, on top of the escalating government expenditures.
The delay in opening the new resorts for operation also means the lost revenue to the government through bed tax.
So, the delay and extension costs a lot to the government, and these factors make us wonder, why the delay in opening those resorts?
The leasing of islands for tourism development is carried out by the Ministry of Tourism and follows a model in which uninhabited islands are auctioned off in a bidding process with government publishing the criteria in advance.
The Ministry of Tourism embarked on an ambitious expansion of the tourism industry with 37 new islands opened for bidding in the period 2004-2006. The first round of developments was announced in 2004, with 11 islands being opened for bidding.
In 2006, with the new set of islands, government tried to be more transparent and objective and opened islands for bidding under the ‘open-rent’ and ‘closed-rent’ categories.
If we were to construct a model for determining the probability of opening a resort for operations within 24 months of awarding the island, it would depend on the following factors: availability of investment finance; management expertise; location of the island; proposed lease rent; assuming all the other factors remain the same.
The availability of investment finance or the ability of obtaining debt finance from banks is linked to almost all the factors mentioned above. For example, the higher the proposed lease rent, the lower will be the profitability, and thus feasibility of the investment. The location of the island has significant implications on the transportation costs and the construction costs of the island, and thus affects the prospect of obtaining finance as well.
The lease rent plays a major and a significant role in making the investment worthwhile, and thus the sustainability of the venture. Hence, bidding procedures need to be de-linked to the rent component in order to make new resort developments a success. The policies adopted in 2004-2006, especially in the case of the ‘open-rent’ category of islands, has done nothing but inflated the lease rents above the true market value. As a result, new investors are struggling to obtain the necessary finance.
If these islands were awarded with industry average lease rents, the probability of getting those islands opened would have increased, and with it the government revenue through bed tax.
Sustainable tourism development is much more important than trying to squeeze short-term gains through high lease rent payments. Sustainable it can be made only through allowing true market values to be reflected in the lease rents.
Thursday, January 15, 2009
"Will increasing the incomes of all increase the happines of all?"
Few years back a group of economists conducted a study in which they compared the happiness levels of societies across the world. One of the questions they raised was “will increasing the income of all increase the happiness of all?” When we think about it, most of the time we relate people’s financial well-being with happiness. If this is true, the happiest people in the world would be the wealthy population.
Addressing this issue at a micro level, you may expect your happiness level to increase a little bit, if there is a bit increase in your monthly income. With the rise in income, probably you would be able to afford more leisure, fancy goods, or a nice home. Will any additional rise in income increase your level of happiness? According to those economists, happiness often depends on relative income as well. If your income doubles, and at the same time, incomes of your neighbor and friends triples, then it may not increase your happiness level. If your income doubles, while incomes of all the others remain the same, then will you feel happier? Depending on the answers that we give these questions, it may be true that increasing the income of all may not increase the happiness of all.
We may bring political reform with it provide us many civil liberties. We need economic reforms, with it should provide a livelihood. We also need social reforms, so that we can achieve the kind of ‘happiness’ that I’m talking about.
We may establish a society based on good democratic principles and even progress economically. However, economic progress not necessarily means improvement in living standard. With a rise in income level, there must be mental happiness, and the emotional well-being of the people in the country. Economic development if achieved at the expense of a wealthy society with high suicide rates, increased crimes, and broken families, then increasing the incomes alone may not the improve the happiness of all.
Addressing this issue at a micro level, you may expect your happiness level to increase a little bit, if there is a bit increase in your monthly income. With the rise in income, probably you would be able to afford more leisure, fancy goods, or a nice home. Will any additional rise in income increase your level of happiness? According to those economists, happiness often depends on relative income as well. If your income doubles, and at the same time, incomes of your neighbor and friends triples, then it may not increase your happiness level. If your income doubles, while incomes of all the others remain the same, then will you feel happier? Depending on the answers that we give these questions, it may be true that increasing the income of all may not increase the happiness of all.
We may bring political reform with it provide us many civil liberties. We need economic reforms, with it should provide a livelihood. We also need social reforms, so that we can achieve the kind of ‘happiness’ that I’m talking about.
We may establish a society based on good democratic principles and even progress economically. However, economic progress not necessarily means improvement in living standard. With a rise in income level, there must be mental happiness, and the emotional well-being of the people in the country. Economic development if achieved at the expense of a wealthy society with high suicide rates, increased crimes, and broken families, then increasing the incomes alone may not the improve the happiness of all.
Thursday, January 8, 2009
Discussion with Economists: youth, employment & wave motorcycles
I thought of sharing the views and ideas expressed in our various discussions as it might help many others and trigger the thought process, and lead to useful recommendations for development policies.
Majority of the youth aged between 18-35 at present fall under a unique category when we compare it to many other countries in the world. In most other countries, when a young person graduates from college and enter the job market, have many aspirations like owning a house, a car, or a good pension (retirement plan). In Maldives (particularly, in Male’) : a ‘wave’ motorcycle, or probably a small 12 x 10 bedroom. There’s no motivation or a driving force for most of the youth to get a good job and work hard to earn a good living. Earn all that money for what? We can’t own a decent house and have a quality life. The most we can fulfill is to own a motorcycle and ride for 30 minutes every night. Some of the tsunami victims who live in temporary camps, when given a little money chose to own a ‘Lifan’ motorcycle, that happens to be parked outside the ‘tent’. Bank of Maldives availed Rf15,000 soft loans out of the proceeds of international aid after tsunami. Most of these loans were being used to purchase motorcycles on installment.
The bottom line is, we need to induce a motivation within the youth, so that they have at least something to work for. When there’s no important goal in life, when hard work and earned income doesn’t provide them an incentive to lead a better life, we may not be able to solve the youth employment problem. We may not be able to reduce the expatriate labor force.
Majority of the youth aged between 18-35 at present fall under a unique category when we compare it to many other countries in the world. In most other countries, when a young person graduates from college and enter the job market, have many aspirations like owning a house, a car, or a good pension (retirement plan). In Maldives (particularly, in Male’) : a ‘wave’ motorcycle, or probably a small 12 x 10 bedroom. There’s no motivation or a driving force for most of the youth to get a good job and work hard to earn a good living. Earn all that money for what? We can’t own a decent house and have a quality life. The most we can fulfill is to own a motorcycle and ride for 30 minutes every night. Some of the tsunami victims who live in temporary camps, when given a little money chose to own a ‘Lifan’ motorcycle, that happens to be parked outside the ‘tent’. Bank of Maldives availed Rf15,000 soft loans out of the proceeds of international aid after tsunami. Most of these loans were being used to purchase motorcycles on installment.
The bottom line is, we need to induce a motivation within the youth, so that they have at least something to work for. When there’s no important goal in life, when hard work and earned income doesn’t provide them an incentive to lead a better life, we may not be able to solve the youth employment problem. We may not be able to reduce the expatriate labor force.
Wednesday, January 7, 2009
Discussion with fellow Economists -political economy
Last night I got the privilege of having a meaningful and very fruitful, and inspiring chat with four of the most prominent and experienced Economists in Maldives. It was just a friendly coffee and happened to last for four hours. We discussed various issues in our economy; including but not limited to; the nature of the political economy in Maldives, current financial turmoil in the world, dollar liquidity in the market, and youth employment problem in the country.
The political economy in Maldives, as it happens in many other developing poor countries is very much depressing. The President we had for the last 30 years had absolute power, the means and a few capable minds to shape up and ‘sequence’ the correct economic measures and bring about much needed economic reforms to our country. However, he provided the opportunity to those businessmen to pat on his back, and as a result, these businessmen were rewarded with ‘resorts’ and many other privileges with the blessing of the government, and at the expense of the rest of the Maldivians. These powerful businessmen then hindered the economic development of the whole country in many ways, and enabled them to establish and maintain a monopoly on major sectors of the economy. They try to squeeze as much of the scarce available wealth and resources in the country with the help of the government and the President. The mistake made by the President: to let the businessmen pat on his back!
What has happened since then? The same businessmen contested for the parliament and controlled seats in the parliament while under oath to serve and protect the rights of the fellow citizens. But, it is their self-interests that they are protecting. Their own businesses that they want to grow - At the expense of the rest of the people in the country.
I should write about the rest of the discussion at a later time.
The political economy in Maldives, as it happens in many other developing poor countries is very much depressing. The President we had for the last 30 years had absolute power, the means and a few capable minds to shape up and ‘sequence’ the correct economic measures and bring about much needed economic reforms to our country. However, he provided the opportunity to those businessmen to pat on his back, and as a result, these businessmen were rewarded with ‘resorts’ and many other privileges with the blessing of the government, and at the expense of the rest of the Maldivians. These powerful businessmen then hindered the economic development of the whole country in many ways, and enabled them to establish and maintain a monopoly on major sectors of the economy. They try to squeeze as much of the scarce available wealth and resources in the country with the help of the government and the President. The mistake made by the President: to let the businessmen pat on his back!
What has happened since then? The same businessmen contested for the parliament and controlled seats in the parliament while under oath to serve and protect the rights of the fellow citizens. But, it is their self-interests that they are protecting. Their own businesses that they want to grow - At the expense of the rest of the people in the country.
I should write about the rest of the discussion at a later time.
Tuesday, January 6, 2009
Can our country afford these political games??
Yesterday I read an article from one of the newspapers that talked about an interview of the Press Secretary at the President's Office, and according to the article, the President has somehow obtained legal opinion from somebody and is considering declaring 'state of emergency' in order to conduct parliamentary elections. It'd be a dissapointment to those who love democracy, to see one of the three powers, 'Parliment', to be declared void, and the Executive taking charge in the absense of a parliament. I don't understand a way the President can actually call for an election when the constituencies and other laws are still not being determined.
There are a group of parlimentarians and other politicians who want the President to do such a mistake, and prove to all of us, what a great 'dictator' Nasheed can become. There are also a group of parliamentarians who deliberately wants to go against the spirit of the Constitution by supporting to take leave. There are a group of parliamentarians who think that the Constitution was made by them, so they can act as they will and interpret the constitution their own way. There are group of parlimentarias who just cant let go the high salaries and the privileges that come with the job.
My question is, can we at all afford all these politics at this time? It was only three months ago when these politicians appeared on tv and declared that Bank of Maldives is bankcrupt, that the whole economy was collapsed, and so many other things. As a result, public confidence towards banking system, economy, and the government went to an all time low. Our economy is still suffering from that low confidence, and as a result undesired speculations.
After all the dirty tactics and the political games, at last the people have decided, and a new government has been formed.
The National reserves are very low, fiscal deficit is very high, and the economic growth is slowing down. The world economies are in a recession, and there is fear of our economy going into a deep recession if we dont take prudent measures to revive the economy. At a time like this, do we still continue with playing political games,; declaring emergencies, protecting self-interests?? and what not.
It is a time to unite together. Work with the government, private sector, and the people to re-build the nation. It is time for us to put our national interests ahead, and try our best to survive the global economic down-turn. It is time to end these political games and move on.
There are a group of parlimentarians and other politicians who want the President to do such a mistake, and prove to all of us, what a great 'dictator' Nasheed can become. There are also a group of parliamentarians who deliberately wants to go against the spirit of the Constitution by supporting to take leave. There are a group of parliamentarians who think that the Constitution was made by them, so they can act as they will and interpret the constitution their own way. There are group of parlimentarias who just cant let go the high salaries and the privileges that come with the job.
My question is, can we at all afford all these politics at this time? It was only three months ago when these politicians appeared on tv and declared that Bank of Maldives is bankcrupt, that the whole economy was collapsed, and so many other things. As a result, public confidence towards banking system, economy, and the government went to an all time low. Our economy is still suffering from that low confidence, and as a result undesired speculations.
After all the dirty tactics and the political games, at last the people have decided, and a new government has been formed.
The National reserves are very low, fiscal deficit is very high, and the economic growth is slowing down. The world economies are in a recession, and there is fear of our economy going into a deep recession if we dont take prudent measures to revive the economy. At a time like this, do we still continue with playing political games,; declaring emergencies, protecting self-interests?? and what not.
It is a time to unite together. Work with the government, private sector, and the people to re-build the nation. It is time for us to put our national interests ahead, and try our best to survive the global economic down-turn. It is time to end these political games and move on.
Saturday, January 3, 2009
The Economics of Corruption
Corruption is one of the serious diseases that a society has, and detrimental to the economic development of a country. It is often corruption at higher levels that significantly harm the welfare of the society, and impact the economy unfavorably. For example; a huge loan of $30 million for a highway or road project such as the Addu Link Road Project, if at some point a senior official takes a ‘cut’ and as a result only $27 million is actually spent on the project. The society loses due to the poor standard of road construction, and additional funds need to be spent for unnecessary maintenance of the road.
Same goes to harbors, airports and other major infrastructure projects mismanaged due to corrupt officials or managers who choose to satisfy their personal gains at the expense of the society. The economy suffers from unutilized resources as a result of corruption.
Corruption in Maldives is also at an alarming level, according to the recently updated corruption index by the Transparency International. In order to combat corruption and minimize it, we need to understand the economics of corruption at a micro level.
As an individual (especially a person at an influential position), a person chooses to get ‘corrupt’ after making a simple cost-benefit analysis of the situation. The individual makes a rational decision based on this analysis. The benefit to him/her would obviously normally be the amount of money that he gets to put in his pocket from the ‘inside deal’. The costs will be the penalty he has to pay in the event that he gets caught. Hence, the probability of him getting caught, and the penalty he pays play a key role in deciding whether to get corrupt or not. If the person believes that the probability of getting caught is very low, given the loopholes in the system, then there is a higher tendency for getting corrupt. On the other hand, even if the probability of getting caught is high, however, the penalty is very low, then, it makes sense to take the risk of getting corrupt. If the penalty is very high, but the probability of getting caught is pretty low, then the person would have to make a decision considering the benefit (amount of money) he gets to keep.
Based on the above analysis, policy makers have a simple formula that can be used to combat corruption. Either increase the penalty or design the system in such a way to increase the probability of getting caught. In the case of Maldives, what we have seen in the past 10-20 years is that people get caught, or corruption cases are well known in the society, however, the penalty is sow low that corruption has grown and become very popular. Then again, I sometimes ask, how high can the penalty get? Death? If a person is caught on a corruption case exceeding one million rufiyaa, he will get death penalty! Wow. Does that sound reasonable? Will people accept executing a person for getting a little greedy and taking a few bucks from our money?
The perception of the society towards corruption also plays an important role here. If it is perceived ‘ok’ to be corrupt, and a short-cut to getting wealthy, then incidences of corruption may increase. On the other hand, if corruption is generally perceived as a bad thing, and anybody who gets caught has to face the ‘disgrace’ from the society, it could be one other factor the person would consider when choosing to get corrupt.
Same goes to harbors, airports and other major infrastructure projects mismanaged due to corrupt officials or managers who choose to satisfy their personal gains at the expense of the society. The economy suffers from unutilized resources as a result of corruption.
Corruption in Maldives is also at an alarming level, according to the recently updated corruption index by the Transparency International. In order to combat corruption and minimize it, we need to understand the economics of corruption at a micro level.
As an individual (especially a person at an influential position), a person chooses to get ‘corrupt’ after making a simple cost-benefit analysis of the situation. The individual makes a rational decision based on this analysis. The benefit to him/her would obviously normally be the amount of money that he gets to put in his pocket from the ‘inside deal’. The costs will be the penalty he has to pay in the event that he gets caught. Hence, the probability of him getting caught, and the penalty he pays play a key role in deciding whether to get corrupt or not. If the person believes that the probability of getting caught is very low, given the loopholes in the system, then there is a higher tendency for getting corrupt. On the other hand, even if the probability of getting caught is high, however, the penalty is very low, then, it makes sense to take the risk of getting corrupt. If the penalty is very high, but the probability of getting caught is pretty low, then the person would have to make a decision considering the benefit (amount of money) he gets to keep.
Based on the above analysis, policy makers have a simple formula that can be used to combat corruption. Either increase the penalty or design the system in such a way to increase the probability of getting caught. In the case of Maldives, what we have seen in the past 10-20 years is that people get caught, or corruption cases are well known in the society, however, the penalty is sow low that corruption has grown and become very popular. Then again, I sometimes ask, how high can the penalty get? Death? If a person is caught on a corruption case exceeding one million rufiyaa, he will get death penalty! Wow. Does that sound reasonable? Will people accept executing a person for getting a little greedy and taking a few bucks from our money?
The perception of the society towards corruption also plays an important role here. If it is perceived ‘ok’ to be corrupt, and a short-cut to getting wealthy, then incidences of corruption may increase. On the other hand, if corruption is generally perceived as a bad thing, and anybody who gets caught has to face the ‘disgrace’ from the society, it could be one other factor the person would consider when choosing to get corrupt.
Friday, January 2, 2009
Hello 2009 !
Wishing everybody a happy new year, and hope that it'll be a successful year for all of us. As we enter 2009, the world is facing its worst economic recession since the Great Depression of 1930s. The American economy is facing deflation as the price of oil has declined to a record low of 37 dollars after hitting a high of 146 dollars in July 2008. It is predicted that price of oil may fall to even 20 dollars within this year, meaning deflationary fears throughout the year. Prices of major commodities are also falling, and major commodity traders like New Zealand, Australia, and Canada all fear economic slowdown within this year.
At a time like this, what's happening in our economy? We sure are not facing deflation. Government expenditure (especially current expenditure) is accelerating each month, with it the government fiscal deficit. Last three years of fiscal mismanagement has led to unsustainable levels of government deficit. It is estimated that the total fiscal deficit in 2008 exceed Rf5 billion. As part of this deficit was financed through the central bank, inflation is on the rise.
The european and the world economy has entered a deep recession, and tourism revenue is expected to decline in 2008. However, the newly elected government seems determined to fulfill all its campaign promises, and the people have all their expectations at the highest level. Current expenditure is expected to inflate further with the ever increasing political posts being announced almost every week. Newly formed independent institions and commissions also demand higher expenditure for their salaries and running costs. All these expenditures - mostly unproductive, and politically motivated, aren;t doing much good to the economy and the productivity of the country. When the economy is not growing, the living standard of people will not increase.
For all these reasons, and many more, it is critical that the President and the officials in the President's Office involved in formulating policies understand the economic reality of the situation our country is at present. They need to understand the implications of their policies to the economy. More specifically, the fiscal deficit and the resulting government debt of the country.
At a time like this, what's happening in our economy? We sure are not facing deflation. Government expenditure (especially current expenditure) is accelerating each month, with it the government fiscal deficit. Last three years of fiscal mismanagement has led to unsustainable levels of government deficit. It is estimated that the total fiscal deficit in 2008 exceed Rf5 billion. As part of this deficit was financed through the central bank, inflation is on the rise.
The european and the world economy has entered a deep recession, and tourism revenue is expected to decline in 2008. However, the newly elected government seems determined to fulfill all its campaign promises, and the people have all their expectations at the highest level. Current expenditure is expected to inflate further with the ever increasing political posts being announced almost every week. Newly formed independent institions and commissions also demand higher expenditure for their salaries and running costs. All these expenditures - mostly unproductive, and politically motivated, aren;t doing much good to the economy and the productivity of the country. When the economy is not growing, the living standard of people will not increase.
For all these reasons, and many more, it is critical that the President and the officials in the President's Office involved in formulating policies understand the economic reality of the situation our country is at present. They need to understand the implications of their policies to the economy. More specifically, the fiscal deficit and the resulting government debt of the country.
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