US embassy cable - 04COLOMBO933

UNCLAS SECTION 01 OF 02 COLOMBO 000933 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR SA/INS, EB, DRL, INL, OES 
TREASURY FOR OTA 
COMMERCE FOR ITA:ABENAISSA 
 
E.O. 12958: N/A 
TAGS: BEXP, EAIR, ECON, EFIN, ETRD, MV, PREL, SNAR, Maldives, ECONOMICS 
SUBJECT: MALDIVES: MAJOR ECONOMIC CHANGES ON THE HORIZON? 
 
REF: 03 COLOMBO 1674 
 
SENSITIVE BUT UNCLASSIFIED. PLEASE PRTOECT ACCORDINGLY. 
 
1. (U) Econoff traveled to Male, and Gan May 17-20 and 
learned about the following economic activities: 
 
-- New Legislation 
-- Major Construction Opportunities 
-- Garment Factories Closing 
-- New International Airport 
-- Customs Cooperation and Agreement 
-- Terrorist Financing 
-- GLOBE 
 
New Legislation 
--------------- 
2. (U) Dr. Hassan Saeed, the new Attorney General said he 
planned a complete review and update of civil and criminal 
laws over the next five years.  On the economic front, there 
will be new Bills on Audit, Treasury, Public Enterprises, 
Securities and Companies.  Some aspects of the Land Law have 
already been reformed.  Saeed also said that Labor issues had 
been neglected and that a Labor Bill will be presented to 
Parliament by the end of the year, outlining the rights and 
responsibilities of government, labor and management. (Note: 
Labor reform is an area in which the USG has been urging 
action in meetings with the previous AGs.  Maldives does not 
have GSP privileges based on its current labor stance.) 
 
Major Construction Opportunities 
-------------------------------- 
3. (U) Maldives has numerous major construction projects 
underway or in planning.  Eleven new islands have been 
offered for resort development.  Construction and reclamation 
continues on Hulhumale, a large island that will ultimately 
provide housing and services for 90,000 people, as well as 
warehousing and commercial activities.  A tender notice for a 
bridge linking the airport island to the capital island is 
now published.  Work on a yacht port in the north and a 
container port in the south is in progress.  Two new 
canneries will be built in the north as well.  There is 
minimal local expertise in construction, so these projects 
are designed and built by foreign firms, though there is 
little US participation. 
 
Garment Factories Closing 
------------------------- 
4. (U) Just over 2,000 workers, primarily Sri Lankan, work in 
four Sri Lankan-owned garment factories on the southern 
island of Gan (see reftel).  All factories will close by 
early 2005, as the Maldivian quotas under the Multi Fiber 
Arrangement expire.  The factory operations and, owners hope, 
the experienced staff will move to Sri Lanka, where costs are 
considerably lower.  The closure will affect GoRM through 
loss of revenue from the 4-5 flights each week servicing the 
factories, diminished demand for fresh foods and loss of 
royalties paid for the use of land. 
 
New International Airport 
------------------------- 
5. (U) Econoff met with Ahmed Naseer, Manager of Regional 
Airports for the Ministry of Transport and Civil Aviation at 
Gan airport.  Construction of a new international airport, 
using the old RAF runway in the southern island of Gan (50 
miles south of the equator and 400 miles north of Diego 
Garcia) should finish in October with the official opening 
early in 2005.  Built to ICAO standards, the airport will be 
able to handle up to a fully loaded Boeing 767 aircraft, or 
Airbus A300 with minimum load.  The airport,s main clients 
are expected to be tourists at the new Shangri-La resort 
(under construction), and the four other islands nearby that 
were just offered for tourism development.   One or two 
flights a week are expected in the beginning, originating in 
Europe, China and/or Japan.  There is still interest in 
establishing a regional flight school at the airport. 
 
Customs 
------- 
6. (SBU) Ibrahim Zuhair, Managing Director of Customs noted 
that the Agreements for bilateral Customs Cooperation and 
Maldives, issuance of electronic garment visas (ELVIS) were 
with the Ministry of Foreign Affairs, and he expected their 
approval soon.  He said that fighting illegal drug 
importation and use is a high priority for the government, 
and requested assistance in the form of a consultant to study 
the GoRM needs to enhance its drug interdiction capacity.  US 
DEA will conduct anti-narcotics law enforcement training in 
Maldives this month through the Colombo Plan.  (Note: Illegal 
drug use was also raised as a significant problem by the 
Chief of Addu Atoll in the south.) 
 
Terrorist Financing 
------------------- 
7. (SBU) The Maldives Monetary Authority (MMA) acts as the 
Central Bank for GoRM.  Abdul Ghaffor, the Assistant Director 
confirmed that the MMA acts immediately upon the information 
sent by the embassy on terrorist organizations, but has not 
found any assets in Maldivian banks.  Ghafoor will attend the 
FINCEN anti-money laundering conference in Abu Dhabi and said 
the GoRM looks forward to the upcoming visit by US Treasury 
Anti-Money Laundering Team the week of June 14.  He mentioned 
the need for assistance on drafting legislation on terrorism 
and money laundering. 
 
GLOBE Program 
------------- 
8. (U) Dr. Mohammed Ali of the Environmental Research Center 
(ERC) said that ten schools have been selected for the GLOBE 
program.  Organizers were looking for ways to include schools 
in the outer atolls and are contemplating using roving 
trainers to train teachers on the distant islands.  Dr. Ali 
showed Econoff the new SAARC Coastal Management Office, also 
located at the ERC, which will open in June or July. 
 
Comment 
------- 
9. (SBU) In comparison with previous visits, there was a 
noticeable increase in activity in economic sectors.  Opening 
eleven new islands and a second international airport for 
development signals GoRM confidence in the growing demand for 
the Maldives' luxury brand of tourism, and is a reflection of 
successful efforts to attract visitors from new markets, 
including Russia and China.  Since all inputs (including 
sand) must be imported, this development offers huge 
opportunities for construction, management, equipment, 
transport, and related suppliers.  The Econ/Comm section will 
continue to publicize these opportunities for US firms. 
 
10. (SBU) Comment continued: Action on the list of new 
economic legislation by Attorney General would modernize and 
open the economy significantly.  Though all GoRM 
interlocutors referred to major changes in the legislation, 
regulations and the Constitution, private sector 
representatives had lower expectations, saying they didn't 
expect the President to loosen his tight hold on government 
or society by very much. 
LUNSTEAD