President Dr. Mohamed Muizzu has assured resort operators that the new requirement to convert 40 percent of monthly gross sales through the domestic banking system will not affect salaries, loan repayments or day-to-day operations.
Speaking to the press after ratifying amendments to the foreign exchange framework, President Muizzu said the changes were based on extensive research, technical assessments and consultations with relevant stakeholders.
New 40% requirement for resorts
Under the revised rules, Category A tourism establishments must convert 40 percent of their monthly gross sales, replacing the previous option of converting USD 500 per tourist.
Category B establishments must convert either USD 25 per tourist or 20 percent of gross sales.
For businesses outside tourism, the annual foreign currency revenue threshold has been increased from USD 15 million to USD 25 million.
Non-tourism businesses earning more than USD 25 million annually in foreign currency must convert 40 percent of gross sales. Fully Maldivian-owned businesses in this category are required to convert 7 percent.
The required foreign currency must be deposited into an account at an MMA-licensed bank by the 28th of the following month.
More tourism dollars to enter banking system
President Muizzu said the tourism industry generated around USD 5.6 billion last year, but only an estimated USD 3.8 billion entered the domestic banking system.
Of that amount, only 21 percent was converted through banks, according to figures cited by the President. Before the foreign exchange law was introduced, the conversion rate stood at around 10 percent.
The President said bringing more tourism dollars into the official banking system would directly benefit the public and improve access to foreign currency for importing essential goods.
Resort operations will not be affected
President Muizzu rejected concerns that the 40 percent requirement could make it difficult for resorts to meet their financial obligations.
He said technical calculations showed resorts would have sufficient foreign currency to pay salaries, service development loans and cover operational expenses before meeting the conversion requirement.
“There is absolute certainty that converting 40 percent will not impede the repayment of resort development loans, the payment of staff salaries, or any other operational costs,” President Muizzu said.
He also pointed to foreign currency being exchanged at higher rates outside the official banking system as an indication that dollars were available in the market.
Dollar salaries must continue
The President stressed that resorts must not use the new requirement as a reason to stop paying employees who currently receive their salaries in US dollars.
“No resort should take such action, and no excuse will be acceptable,” he said.
President Muizzu said resorts could continue paying dollar salaries, servicing loans and meeting other expenses while complying with the 40 percent requirement.
He urged resort owners to cooperate with the government’s efforts and called on enforcement agencies to ensure the law is fully implemented.
Tougher action against illegal dollar trading
The amendments also strengthen controls over the foreign exchange market.
Foreign currency transactions must comply with rates or bands established by the Maldives Monetary Authority, while businesses conducting foreign exchange activities must obtain the required licence.
Selling, attempting to sell or advertising US dollars above rates permitted by the MMA can result in penalties.
Individuals may face fines ranging from MVR 25,000 to MVR 1 million, while legal entities can be fined between MVR 100,000 and MVR 5 million.
