Good morning Ladies and Gentlemen:
It indeed is a pleasure to be here today. Before I go into depth, sharing a few thoughts with you most distinguish entrepreneurs and enterprising people, I would also like to stress the moment in time that we gather here today. The world faces a number of economic difficulties. At the same time we are in transition from autocracy to democracy. In my mind, this doesn’t necessarily role upon us as a disadvantage. But I would like to see many positive notes coming out of this situation or predicament.
Yes, indeed economic activity is slowing down this year and this, in a sense, perhaps is necessary for this country. We have had many years of very fast growth, sometimes reaching double digit. All that have really quiet inflated the economy beyond its natural and beyond its realistic limits. The credit crunch, in a sense, is simply and most importantly because of this, because of the bubble.
The construction industry has invested a lot in the country. And they have driven a boom which has reached its peak, and therefore, naturally will have to settle down.
The government has taken the opportunity to restructure itself - to start living by its means, to balance its books. We believe that it is through prudent economic engagement and fiscal management that we will be able to embark upon sustainable development.
We would like the industry to do the same. In many areas, especially the construction industry needs restructuring. The companies themselves have to come down to their actual sizes and then move ahead.
Of course, the future is very bright. We believe that the new economic policy of this government will allow them to develop much faster and more healthier than in the future. But this is the time for them to restructure themselves before embarking on any new ventures.
In the past, the government has been the main expenditure component or the investment partner in the construction industry. It is through the government PSIP programme that most of the contracts have been driven - not only through direct government financing, but also through bilateral and multilateral agencies. But on the main, most of these contracts, most of these projects have come about through the government public sector investment programme.
Our thinking is that we should corporatize the PSIP programme. Government believes that all corporate activities within the government would best be served to the people through purely corporate means and activities, not necessarily through the government. Therefore, we have invited international investors to invest in water, in all infrastructure programs - most importantly, in water, sewerage, harbours, housing, airports ports and roads. We are getting a fair amount of interest from international companies who want to engage with the public in private-public partnership and proceed with the same PSIP programme or the same infrastructure programme.
The government brought out notices for those who are interested in building and supplying 10000 homes during the course of this year. We now have interest from 14 different recognised and respectable international companies who want to engage themselves in this exercise. The 10000 homes project become successful because the project is also linked to the most lucrative resource that we have, which is tourism land - 10000 homes are linked to 1000 luxury villas.
So, through that public and private partnership, the government can mobilize its natural resources and the foreign investor can mobilize finance and the technology and the know-how.
We feel that this model is going to work and it is working. We already, as I said, have more than 14 international companies who want to embark upon, embark in this project and build 10000 home. So, therefore, even if in a sense, it’s quite reassuring for me.
Last year, as the president mentioned, last year the government gave out more than 100 projects and this year we have announced only 10. But as we announce the 10000 homes, for instance, we would be more than doubling what the previous government would have or the last years’ projects would have accumulated to - 10000 home would come up to 500 million dollars. We believe that we have secured people who are interested in developing these 10000 homes because they have an interest and they understand the returns that they can get, not only from homes but also from the luxury villas.
So basically all suppliers should gear themselves because during the course of this year this country would be looking at building 10000 homes not through the government budget, but through the private public partnership programs that we are running. We feel that these programs would be more transparent, fair, economically sound with better financial plans, and therefore, it would have more scope of succeeding.
The government has also announced for the development of an integrated transport system. This will involve, again, building a number of terminals, harbours and jetties, setting aside the vessels and other infrastructure required for that. It is an ambitious program. But here, again, because we have been able to link the providers’ profits not only through transport but also through guest houses, we are seeing that there is a healthy interest from people who want to engage in this program as well. We have more than 8 respectable and reputable international companies who want to build an inter-island transport system in the Maldives according to models that we have provided.
At the same time, we are fortunate to welcome a number of big development companies such as Boscalis, who are willing to do another international port in Gulhifalhu.
And we have the ongoing program of redeveloping the international airport at Hulhule through privatizing the airport and finding a joint venture partner to the airport.
We have also had a number of discussions with the Cable and Wireless who is very willing to, again, expand their program in the Maldives, and therefore, come back with a lot more investments.
All in all, our understanding is, that by the last quarter of this year we will have a number of projects lined up.
It is during this period that we are hoping, that the government is hoping, that private companies, construction companies in the Maldives will take this opportunity to restructure themselves. They have a lot of bad debts, they have lot of unperformed contracts. In fact we have 1.4 billion rupees or almost about 100 million dollars of PSIP government programs running this year. We don’t think that the government will be able to disperse more than 40 million dollars of this 100 million dollars. It’s just simply because work is not going on. Companies need to restructure themselves they need to come up with new cash flow programs and financial plan.
While we go into all these, there are many more other related ideas or thinking that this government entertains. Most importantly it is in use of more imaginative materials - we would be looking at more greener materials - renewable materials. I am not simply referring to renewable lights and so on and so forth. But if you have a look at the landscape of this country now, what would be very apparent to you would be the amount of dredging that is going on here. It just simply amazing!
We want to see if there is technology and material available to build harbours, jetties and ports without dredging. I understand and I am advised that this is quite possible. Through different forms of materials that can be used, pontoons and so on and so forth, it perhaps, it probably can be done. We are also looking at the energy productions through renewable sources, not through diesel plants but through wind, solar currents and so on and so forth.
I would like to stress that this government has a program that encourages renewable greener products, and also more imaginative use of material. Lack of materials, again, access to materials [in atolls is a problem], although, construction material is readily available in Male’. It’s our decentralization program that stands at the heart of the government’s economic plan. And we would like to use private investors and entrepreneurs to engage or to channel decentralization through providing materials and building go downs not only in Male’ and near Male’ but also around the atolls. Much of the developments, for instance the 10000 homes, would be built in the atolls, the harbours are being built in the atolls, and utility concerns are coming to the atolls. This government has a very ambitious and a big outer island development program.
I don’t necessarily want to go on and on and on. But we have a vision and we are very focussed on what we are looking at.
This government believes that its privatisation program, its decentralisation program and its democratisation process would take us to a level keel. And we will be at it. And we are already seeing many results of our policies and plans.
It’s not just simply me boasting about our magnificent economic plan, but I have been fortunate, yesterday, to receive exactly the same narrative from the World Bank, from the Treasury in England, from United Nations Development Funds and so on.
We have tested our economic policy. We have tested our privatisation plan. And this is perfectly water tight and, therefore, we are very clearly comfortable. We think you come here at exactly the right time. This is the time to make plans and start setting up shops here. You will be able to disperse, I am certain, by the last quarter of this year.
Again, thank you very much and hope that you enjoy your stay in the Maldives.
Thank you.
