Parliament Approves SEZ Act Amendment

The Parliament has passed the first amendment to the 2014 Special Economic Zones (SEZ) Act, authorising the development of mixed-use, environmentally focused “sustainable townships” within designated SEZs.
The bill, submitted by Baarashu MP Ibrahim Shujau on behalf of the government, was approved today with the backing of 46 MPs. Ten MPs voted against the proposal. The vote followed the Committee of the Whole House’s acceptance of the bill yesterday.

Opposition Raises Concerns

In yesterday’s Committee of the Whole House, opposition MP Meekail Ahmed Nasym criticised the speed of the legislative process, calling for the committee’s review period to be extended to 1 February to allow wider consultation. He proposed inviting representatives from the Tourism Ministry, the Maldives Association of Tourism Industry (MATI) and the Finance Ministry to clarify potential budgetary implications.

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Meekail alleged that the amendment’s main purpose was to secure funding ahead of the 2028 presidential election. 

Supporting his concerns, Dr Ahmed Shamheed warned that the measure would “benefit specific groups” and could allow foreign actors to obtain land at no cost. He further claimed that an ongoing development project in Noonu Atoll—where 11 islands have reportedly been reclaimed—was likely to be reclassified as a sustainable township in order to benefit from SEZ tax exemptions.

Dr Shamheed also argued that the amendment could grant broad incentives, including waivers on import duty, TGST and green tax, as well as a reduced 5% profit tax for qualifying developments, compared with the standard 15% rate. Such concessions, he said, risked creating unfair competition by encouraging tourism ventures to restructure under the SEZ framework.

Meekail’s motion to extend the committee review was defeated by 53 votes, with nine MPs in favour.

Investment Rules and Sustainability Standards

Under the amendment, sustainable townships must secure a minimum investment of USD 500 million (approximately MVR 8 billion). Developers will be required to integrate luxury tourism and residential components, establish international-standard healthcare or training facilities, and implement renewable energy and waste-management systems.

At least 60% of power consumption within such townships must come from renewable sources. Provisions also emphasise self-sufficiency through agriculture or aquaculture, alongside the development of high-quality housing, education and medical services.

Sustainable townships were formally recognised under SEZ policy via a presidential decree issued by President Dr Mohamed Muizzu on 12 January 2025. The initiative marks a shift from earlier SEZ projects, which typically focused on single-sector investments exceeding USD 100 million.

The amendment will take effect following presidential assent.