Parliamentary Committee Endorses Amendment to SEZ Act Enabling Sustainable Townships

The Whole House Committee of Parliament has endorsed the first amendment to the 2014 Special Economic Zones (SEZ) Act, paving the way for the development of mixed-use “sustainable townships” within designated SEZs. The proposals aim to attract large-scale, environmentally responsible investment through a new class of projects combining tourism, residential, and social infrastructure.

During today’s committee session, 55 MPs voted in favour and nine against the bill, which was tabled by Baarashu MP Ibrahim Shujau on behalf of the government.

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Opposition Raises Concerns Over Transparency and Economic Impact

Opposition MP Meekail Ahmed Nasym argued that the committee should extend its review period until 1 February to ensure wider consultation. He proposed bringing relevant stakeholders, including the Tourism Ministry, Maldives Association of Tourism Industry (MATI), and the Finance Ministry, before the committee, stressing the need to understand potential budgetary implications.

Meekail claimed the bill’s primary objective was to secure funding ahead of the 2028 presidential election.

Supporting his stance, South Hulhumale MP Dr Ahmed Shamheed warned that the amendment was designed to “benefit specific groups” and would effectively 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 being positioned for reclassification as a sustainable township to secure tax exemptions.

Dr Shamheed added that the measure could grant extensive tax concessions, including waivers on import duties, TGST, and green tax, as well as a reduced 5% profit tax for qualifying ventures, compared with the 15% rate applied elsewhere. Such arrangements, he argued, would create unfair competition by incentivising tourism businesses to restructure under SEZ townships to benefit from lower rates.

Government Pushes for Swift Approval

Majority Leader, Inguraidhoo MP Ibrahim Falah, said the bill should be passed without delay, adding that the governing party would ensure its approval. Meekail’s proposal to extend the review period was rejected by 53 votes, while nine MPs supported the move.

Investment and Sustainability Requirements

Under the proposed amendment, sustainable townships must secure a minimum investment of USD 500 million (approximately MVR 8 billion). Developers will be required to meet a series of standards, including:

• Integration of luxury tourism and residential components
• Establishment of international-standard training or healthcare facilities
• Development of renewable energy systems and waste management solutions

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

Sustainable townships were formally recognised under SEZ policy by a presidential decree issued by President Dr Mohamed Muizzu on 12 January 2025. The initiative marks a shift towards mixed-use development, contrasting with earlier SEZ projects that typically focused on single-sector investments exceeding USD 100 million.

The amendment will now proceed to the floor of the parliament.