Gov’t Submits Foreign Investment Act to Parliament
The Maldives government has introduced the Foreign Investment Act to Parliament, aiming to define areas and regulations for foreign investments within the country.
The bill was submitted to Parliament by Ahmed Azaan Marzooq, a parliamentarian who has highlighted the government’s intention to boost foreign investment. The bill, proposed by the government, seeks to define the areas where foreign investors can operate and set out the regulations governing such investments. According to the government, this act is expected to create a conducive environment for the inflow of foreign capital, technology, knowledge, and skills into the Maldives.
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The proposed legislation outlines the establishment of an investment promotion mechanism to attract and retain foreign investors. It specifies that the act should determine the sectors available for foreign investment, the rules and conditions for issuing permits, and the measures to protect and secure foreign investors. The Ministry of Economic Development and Trade has been designated as the responsible body for developing regulations to promote investment.
Once enacted, the minister will be required to identify and announce sectors where foreign investment will be prohibited. In making these decisions, the government must consider potential threats to national security, the impact on industry competitiveness, the development of indigenous enterprises, and the sector’s long-term contribution to productivity.
The bill also mandates a review of permitted and prohibited investment sectors every three years. Furthermore, any transfer of shares from a Maldivian company to a foreign entity will require investment permission, limited to companies specifically designated for foreign investment.
The Foreign Investment Act guarantees full protection and security for foreign investors and their investments, including the right to repatriate capital and profits. However, the bill allows for restrictions on foreign investment to safeguard national sovereignty, defence security, environmental protection, and human rights.
Penalties for violations under the act include fines of up to 30 per cent of the investment. Additionally, submitting incorrect information to obtain a licence could result in fines ranging from USD 6,494 to USD 64,940, depending on the severity of the infraction.
Upon the enactment of the new act, the existing Foreign Investment in Maldives Act will be repealed. Investments currently licensed under the old act will be transferred to the new framework, with foreign investments permitted under the Ministry of Tourism given a 12-month period to register under the new act.
The Foreign Investment Act will apply to all matters related to foreign investments, except those governed by the Special Economic Zone Act. Alongside this bill, amendments to the Financial Securities Act and the Business Registration Act were also proposed, including provisions to allow foreign investors to participate in permitted securities.
