The Maldives Monetary Authority (MMA) said today that the Foreign Exchange Bill proposed by MMA states that businesses other than tourism that earn $20 million in revenue must also convert dollars.

At a press conference held at MMA today, Amdhaan Mohamed, Senior Manager of the Statistics Division of MMA, gave a detailed presentation on the bill. The bill, which further strengthens the previously established foreign exchange regulation, categorizes businesses that need to convert dollars to Maldivian banks into three categories and includes details on how to do so.

While the tourism industry is a $4.5 billion industry, banks are currently converting only three percent of it. Before COVID, that figure was at six percent. Looking at all sectors, before COVID, 19 percent was being converted to banks. However, that number has now fallen to 10 percent. Large businesses that earn in dollars are required to convert dollars to banks in order to increase those numbers and increase the reserves needed for government dollar expenses and debt repayment.

According to the bill published by MMA, Category A includes tourist resorts, integrated resorts, private islands, and resort hotels in the tourism industry, which must deposit and convert to rufiyaa at a bank at a rate of $500 per tourist for the total number of tourists arrived that month.

The bill states that Category B, which includes tourist hotels, guesthouses, and tourist vessels, must deposit and convert to rufiyaa at a bank at a rate of $25 per tourist for the total number of tourists arrived that month.

Category C is the category that states that companies earning more than $20 million in revenue from non-tourism businesses that earn in dollars must convert dollars to banks. Such companies must convert 25 percent of their dollar revenue.

“The current Foreign Currency Bill only includes TGST or Tourism Goods and Services providers, but the newly proposed bill includes a category for the non-tourism sector,” said Amdhaan.

The bill does not change the deadline given in the previously established regulation for depositing money. The money for three months must be deposited within three months of reporting. The money must be deposited before the 28th day of the third month every three months.

The bill sets out exceptions for tourism businesses from converting dollars. These are:
1- Tourists who have not stayed for more than 24 hours
2- Children under two years of age
3- People staying for free or complimentary

Enforcement clauses
At the press conference, it was stated that the bill also includes enforcement clauses. In addition, clauses related to collecting information about business revenues have also been included.

“Its main objective is to solve the difficulties in collecting information for MMA. Then, through MIRA, we have included a clause in the proposed bill that allows us to collect information. In addition, there is a clause for penalizing or fining parties that violate the deposit rule or the conversion rule or the obligation to convert, which is a clause we have included to give MMA enforcement power,” said Amdhaan.

The clause gives MMA the power to impose a fine of 0.05 percent based on the amount required to be deposited. After that period expires, for each day the fine is not paid, the fine can be increased by an amount not exceeding that percentage. The bill states that fines of up to 0.1 percent of the amount to be converted can be imposed.

Businesses that need to deposit dollars in banks must register with MMA as soon as the bill is ratified and becomes law. “Thus, from the moment the bill is enacted, we are giving 10 days to register with MMA for those who are not registered,” said Amdhaan. He said that many companies have already registered with MMA.

The bill states that if a party submits that they do not have foreign currency in their possession and if the Authority is satisfied that they do not have that amount of foreign currency, the Authority may, in accordance with the regulations, authorize the conversion of a lesser amount than specified in the bill. These are:

1- Debts payable in foreign currency
2- Debts payable to financial institutions in foreign currency
3- Foreign currency obligations determined by a court decision
4- Other foreign currency obligations authorized by the Authority